Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

DEATH OF A MEMBER

Mr. Speaker: I regret to have to inform the House of the death of Sir Gerald Nabarro, Member for Worcestershire, South, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

Oral Answers to Questions — TRADE AND INDUSTRY

Sale of Goods (Pricing)

Miss Fookes: asked the Secretary of State for Trade and Industry if he will refer to the Director General of Fair Trading for investigation the practice of printing "xp off" on goods for sale.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): The Director General has been given a very wide field for review under the Fair Trading Act 1973. In these circumstances it is right that he should in general be left to evolve his own order of priorities.

Miss Fookes: Will it then be in order to draw the attention of the Director General direct to this particularly pernicious habit, which can only bamboozle the public?

Sir G. Howe: I shall certainly see that the Director General is made aware of what my hon. Friend has said.

Mr. Greville Janner: What is the correct way for an hon. Member to draw urgent matters, such as that referred to in the Question, to the attention of the Director General?

Sir G. Howe: The Director General is free to receive correspondence from, or to have matters drawn to his attention by, members of the public and, a fortiori, hon. Members.

Take-over Code

Dr. Gilbert: asked the Secretary of State for Trade and Industry if he will seek to incorporate the Take-over Code in statutory form in his coming review of company law.

Sir G. Howe: The Government will seek powers in the forthcoming Companies Bill to deal with certain specific abuses which may occur in take-over situations.

Dr. Gilbert: Does the right hon. and learned Gentleman accept that it simply will not be good enough to leave the matter merely on the basis of what is in his White Paper with regard to insider trading and warehousing? There is a whole range of other abuses that the Take-over Panel, through no fault of its own, is unable to deal with. There is a need for statutory power and rigid enforcement to deal with them.

Sir G. Howe: Clearly there are certain matters which require statutory powers and enforcement by means of an Act of Parliament, but equally clearly there are others which are more susceptible of remedy by means of a self-policing organisation of the kind represented by the Take-over Panel. It is a matter for consideration where the line should be drawn.

Mr. Torney: Is the Minister aware that there is grave discontent in the city of Bradford among workers employed by Associated Weavers because of the proposed take-over by an American company? Is he aware that the trade union concerned has been in contact with me because the factory is in my constituency? Will he investigate the take-over and try to ensure that that rather large firm, employing many Bradford people, stays British?

Sir G. Howe: So far as lies within my power to do so, I shall consider any evidence the hon. Gentleman places before me.

Mr. Benn: When may we expect the Companies Bill? Shall we be able to debate it at an early date?

Sir G. Howe: The Bill is at an advanced stage of preparation, but I cannot yet tell the House when it is likely to be forthcoming.

Sea Horse Marine Engine

Mr. Willey: asked the Secretary of State for Trade and Industry what progress has been made in his discussions about the Sea Horse marine engine.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): My Department remains in close touch with the company concerned and is keeping itself informed of the progress of this project.

Mr. Willey: Will the Minister try to expedite the progress of the discussions? Is he aware that the very encouraging announcement made last week of Government support for Sunderland shipbuilding would be well complemented with equal support for this marine engine project?

Mr. Grant: Yes, indeed. I think that the company in question is well aware of the urgency. We await certain technical and commercial information from it, and I am sure that it will be as quick as possible in supplying that information.

Aviation Fuel Supplies

Mr. Tebbit: asked the Secretary of State for Trade and Industry what powers he has to restrict the use of aviation fuel by the limitation of the services of British and foreign carriers; and if he will make a statement on the aviation fuel supply position.

The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): British carriers operate under the terms of licences awarded by the Civil Aviation Authority, which follows policy guidance approved by Parliament. Foreign aircraft operate into and out of this country under permits granted by the Secretary of State. The supply of aviation fuel is being closely watched with other oil supplies.

Mr. Tebbit: When my hon. Friend is wondering how the matter should be managed, will he bear in mind that, if we ration fuel to airlines by regulation, the procedure will become increasingly bureaucratic over a long period? If we are to have a long-term problem, per-

haps the matter might be better dealt with by the price mechanism than by regulation.

Mr. Emery: I understand what my hon. Friend has said. However, I should point out that British Airways has announced—last week, I think—cuts of its services which will mean cuts of 10 per cent. in the consumption of aviation fuel.

Mr. Mason: The British Airways Board and the major airlines are not waiting for ministerial advice on the matter, and neither are the oil companies. They have already—

Mr. Speaker: Order. I must insist that even right hon. Members conform to the rules of Question Time.

Mr. Mason: Is the Minister aware that the oil companies have already cut back supplies of aviation spirit to British Airways, and that British Airways is cutting back its transatlantic services? What assessment has been made of the cut-back of British Airways' operations?

Mr. Emery: If the right hon. Gentleman had been listening to my last reply he would have heard me say that, by co-operation, British Airways and the British airline companies have agreed a 10 per cent. cut-back already, without any action from the Government. That is the sort of co-operation we are receiving from much of industry.

Mr. Mason: I was asking what estimate the Government had made of the British Airways Board's operations because of this 10 per cent. cut-back.

Mr. Emery: The right hon. Gentleman should know that that is up to the BAB, and it is co-operating with us, as, indeed, are the private airlines. That is the type of co-operation which the Government are getting without any stimulation from the Opposition.

Take-Overs and Mergers (Referrals)

Mr. R. C. Mitchell: asked the Secretary of State for Trade and Industry how many take-overs and mergers were referred to the Monopolies Commission in 1971 and 1972; and how many have been referred so far in 1973.

Sir G. Howe: Apart from proposals for newspaper mergers, one proposed merger was referred in 1971, three in 1972 and seven so far in 1973.

Mr. Mitchell: Is it the Government's intention to make increasing use of the Monopolies Commission, or what exactly is the Government's intention?

Sir G. Howe: If the hon. Gentleman cares to read the article published some weeks ago in Trade and Industry he will see the Government's intentions set out at great length. The aim of our policy is to single out for reference that minority of cases of real economic importance which raise questions of significant public interest.

Mr. Skeet: I congratulate my right hon. and learned Friend on his statement in Trade and Industry of 1st November 1973. Will he consider revising and bringing up-to-date the 1969 mergers handbook? Can he confirm that less than 1 per cent. of the total number of mergers are referred to the Monopolies Commission and that only 13 per cent. are specifically considered?

Sir G. Howe: The figures for proportions and actual references are set out in the article to which my hon. Friend referred, and again it is made plain in that article that we shall be working towards a revision of the 1969 handbook.

Mr. Molloy: Is the right hon. and learned Gentleman aware that the glass container industry cannot meet the demands of the milk suppliers and that housewives are going short of milk because milk suppliers cannot get bottles? Earlier this year, because of the financial machinations of Slater Walker, the Rock-ware factory in my constituency had to close. Does not the right hon. and learned Gentleman agree that that ought to be referred to the Monopolies Commission because it could have met the requirements and provided the milk bottles?

Sir G. Howe: I shall try to work out at leisure, when I have had an opportunity of reading what the hon. Gentleman said, the connection between the premise of his question and the conclusion.

Company Directors and Partners

Miss Quennell: asked the Secretary of State for Trade and Industry whether he will seek powers to ensure that, where private companies or businesses seek cash from the public, the full names of all directors or partners should appear on all paper used by the undertakings together with those of the company secretary and managing director or manager.

Sir G. Howe: I have this matter under consideration in the context of the Companies Bill.

Miss Quennell: I thank my right hon. and learned Friend for that reply, but may I point out that a private company can buy and use the name of an old-established and reputable company and on its notepaper not disclose the names of its directors and chief personnel, so that constituents are unable to detect from the personalities on the notepaper whether the company is old-established and experienced or a new one which is likely to lose their money?

Sir G. Howe: I appreciate the importance, from one point of view, of the point raised by my hon. Friend, but there is the other aspect, namely, the extent to which, by imposing an all-embracing obligation about disclosure and printing information on all company documents, one might be going too far in imposing impracticable and positively inconvenient burdens on the ordinary conduct of business. I shall, however, bear in mind what my hon. Friend said.

Trade Directories

Mr. William Price: asked the Secretary of State for Trade and Industry how many complaints he has received about the activities of firms dealing in trade directories.

Mr. Emery: The figure is 724, since 1st January, 1972.

Mr. Price: Is the hon. Gentleman aware that, despite legislation, firms which produce these directories—or do not produce them—are continuing to flourish and that many people who ought to know better are being fleeced by these rogues?


Is it not apparent that, despite the decision of the Director of Public Prosecutions to take action against two of the larger firms, changes in the law are necessary? A simple change would do what is desired by making it illegal to demand money unless there is a written order.

Mr. Emery: We must await the outcome of prosecutions that have been launched. The Brandon Publications Company Limited was convicted, as were Wallis Deane Limited and McGraw-Hinds, Limited. I mention those names because I think industry has a right to know those who have been convicted. I should point out, too, that in the appeal made by Brandon Publications the Director of Public Prosecutions has intervened and has taken over the appeal on behalf of the respondents.

Mr. Rost: Can my hon. Friend confirm that the fines imposed on Brandon Publications and others were derisory? I understand that they amounted to only £25. Is it surprising, therefore, that these bogus trade directory firms are proliferating? Moreover, they seem to be getting away without charging VAT and without putting on their invoices details of how many publications they are printing and the publication date.

Mr. Emery: I do not know the case to which my hon. Friend is referring, but one company which was charged with five offences was fined £200 on each of four offences, while the fifth was dismissed. That was a first offence, and I believe that that is of some relevance.

Mr. Leadbitter: Is the Minister aware that most of these organisations are submitting to firms all over the country what purport to be invoices, with very small print, which clerks do not read, and that firms are paying these bandits large sums of money by default? As a result, firms are complaining to their chambers of commerce and trade. I should like to feel that, in addition to those companies which he mentioned, the Minister will look into the whole question of description and the state of application of the law to the firms involved in using this type of apparent invoice.

Mr. Emery: I am conscious of the situation. I have had to deal with 232 letters from hon. Members about this

matter. It is important to know whether prosecutions will hold and whether the appeals can be dismissed. If that happens, the law will be biting. If it does not, the Government will have to consider the matter again.

Power Stations (Coal Use)

Mr. Milne: asked the Secretary of State for Trade and Industry if he will outline the arrangements made for the expansion of coal use in power stations arising from the limitation of oil supplies.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): The CEGB has, with coal-fired stations already in operation, the capacity to increase substantially its burn of coal.

Mr. Milne: Is the right hon. Gentleman aware that that is a rather brief reply to a Question of this importance at this time? Will he remember that this is not just a short-term problem but a long-term problem too? Will he consider the negotiations with the miners against the background of coal expansion and ensure that coal-fired power stations are the order of the day in future?

Mr. Walker: There is considerable potential for increasing capacity from coal production between now and 1980. In the recent announcement we included reference to a design contract for further coal-fired stations, and the negotiations with the miners, the Coal Industry Act and the development of the phase 3 policy take carefully into consideration the need to do just that.

Mr. Burden: Was not the position made difficult by the considerable number of pits closed by the Labour Party and the discharge of about 200,000 miners from the pits? Is there not, therefore, great difficulty in getting miners back into the industry after they were phased out of it by the Labour Government?

Mr. Walker: It is true that in six years 286 pits were closed and 185,000 jobs were lost.

Mr. Palmer: Will the right hon. Gentleman be granting any further consents for oil-fired power stations? He has granted some fairly recently.

Mr. Walker: It is a matter of considering the whole future strategy of power stations, which includes nuclear stations. The important thing is to ensure that there is plenty of flexibility in the system, and there is now sufficient to increase substantially the uptake of coal.

Energy Supplies

Mr. Eadie: asked the Secretary of State for Trade and Industry if he will now make a statement on the supplies of indigenous sources of energy available for the oncoming winter.

Mr. Peter Walker: The majority of our gas supplies will be available from the North Sea. Electricity supplies will depend upon the available supplies of both oil and coal. The Coal Industry Act and the terms of phase 3 were constructed so as to give the maximum encouragement to increase coal production.

Mr. Eadie: As the Minister must now confess that we have an energy crisis and not an energy problem, which was what Government Front Bench spokesmen were fond of saying even so short a time ago as July, can he tell us what the Government are doing to gather information about our indigenous energy supplies? Can he tell us, too, what information is available about getting oil from coal? He knows that even using 1950 technology one can get 100 gallons of petrol and other derivatives from a ton of coal.

Mr. Walker: Research has been stepped up in this respect, as has international collaboration. The technology of the gasification of coal and obtaining oil from it is well known, but there is a considerable gap in terms of substantial production, and a big price differential. I agree that this is a matter which, in terms of the long-range prospect of energy supplies, should be examined carefully. A massive research programme is going on in the United States, and we are collaborating with European countries.

Mr. Skeet: Can my right hon. Friend give the House some indication of the likely increase in the price of coal, assuming that the miners accept the 16½ per cent. increase that they have been offered?

Mr. Walker: I cannot give a specific answer now, but I will find out and let my hon. Friend know.

Mr. Skinner: Is the right hon. Gentleman aware that a few months ago the National Coal Board attempted to close the Glapwell Colliery in my constituency, a colliery that has reserves that would employ about 800 men and give the colliery a life of 10 to 15 years? Is he aware that the board is craftily making no announcement but is allowing the pit to deteriorate so much that it can hardly be operated at the present level? In view of his concern about pit closures between 1964 and 1970 and his concern about preserving the indigenous coal industry, will he tell the National Coal Board to give a fresh lease of life to Glapwell Colliery and so keep these lads at work?

Mr. Walker: I do not know the details of that pit but I know that, in view of the reversal of policy, the National Coal Board has substantially reduced the number of pit closures. There are generally good reasons for a closure, but I will convey the hon. Gentleman's views to the board.

Mr. Edwin Wainwright: asked the Secretary of State for Trade and Industry what is his policy to ensure that there is a sufficient supply of fuels to cover the energy needs of the United Kingdom.

Mr. Peter Walker: My long-term policy is to make the maximum use of the United Kingdom's indigenous resources and, where imports are needed, to do everything possible to ensure that they are obtained on satisfactory terms as to both price and security.

Mr. Wainwright: Will the Minister say whether the foreign companies boring for oil in the North Sea will not interfere in supplying oil to this country? Second, will he bear in mind that, on the last occasion when they had a confrontation with the miners, the Government dragged their feet, called in Wilberforce and swallowed the results of that inquiry, and now they are once more dragging their feet? Will the Minister do something to help the National Coal Board to get out of the present difficulty?

Mr. Walker: All oil from the North Sea will have to be landed in this country.


That will continue to be the position. As regards the coal industry, we have already debated this matter, and the National Coal Board has offered what it can offer under phase 3, which has been taken into account.

Mr. Marten: In view of the immediate possibility of petrol rationing, will my right hon. Friend take into account, if that decision has to be made, the particular difficulties of people who live in country areas who have to drive long distances compared with those who live in towns, together with the fact that bus services in the country areas have greatly declined?

Mr. Walker: Certainly, in any rationing scheme which came forward that would be one of the matters taken into consideration.

Mr. William Hamilton: Is there any prospect of a White Paper or a Green Paper within the next 12 months on the future of energy policy as a whole in the United Kingdom, even for the short term?

Mr. Walker: I can readily understand the hon. Gentleman's desire to have such a paper. There are several major decisions in the course of consideration, for example in regard to nuclear policy. The uncertainty of changing events in the Middle East has made what might well have been a considerable change in any White Paper policy issued a few months ago. This is, therefore, a fast-changing scene. However, I shall look at the hon. Gentleman's suggestion and see whether some policy statement could be made available.

North Sea Oil

Mr. Strang: asked the Secretary of State for Trade and Industry what progress he has made in implementing the recommendations of the IMEG Report.

Mr. Anthony Grant: Action has been taken or is in hand across the whole range of subjects covered in the IMEG Report.

Mr. Strang: It is true that the heads of some of the major oil companies have told the Prime Minister that, if the Government want North Sea oil to come into production as quickly as possible, they should give the oil companies greater free-

dom to buy overseas? Does the hon. Gentleman therefore envisage the energy crisis in the short term leading to a situation in which there is less participation by British industry in this market for services and equipment?

Mr. Grant: I am not aware of that. It is our policy to get oil from the North Sea as quickly as possible and to ensure that British firms have a full and fair opportunity to compete. It is relevant that I should point out that about 6,000 jobs have arisen in new projects in the past two years and that a further 9,000 are in prospect.

Mr. Douglas: Will the hon. Gentleman accept that we all regret the announcement today that a third concrete production platform is being ordered from Norway? Will he accept that this country cannot go on losing these vital orders? What does his Department intend to do to ensure that such production platforms and semi-submersibles are ordered in the United Kingdom?

Mr. Grant: Of course I regret the loss to the United Kingdom economy of any important order. Steel platforms are being built at four sites and at five other sites approval has been given for concrete or steel constructions. The problem is that very deep waters are required for the construction of the concrete platforms and in the United Kingdom this raises important planning issues.

Mr. Eadie: Does the hon. Gentleman agree that it is time that the House had a catalogue of the recommendations from the IMEG Report that the Government have implemented? What liaison is there between his Department and the Department of Employment now that, following the IMEG Report, there has been an interdepartmental report on manpower and training in relation to North Sea developments?

Mr. Grant: I should be glad to detail exactly what we have done in response to the IMEG Report, because it has been substantial. I should be happy to do so either by giving an answer in the House or by writing to the hon. Gentleman and placing the letter in the Library. My Department works closely with the Department of Education and Science on the subject of education and training, and the respective Secretaries of State of those


Departments have announced steps to promote education and training in offshore work.

Quieter Aeroplane Engines

Sir Gilbert Longden: asked the Secretary of State for Trade and Industry what progress is being made in research into quieter aeroplane engines.

The Minister for Aerospace and Shipping (Mr. Michael Heseltine): The results of many years of Government support for such general research, in collaboration with industry and universities, have already contributed to the quieter engines now in or approaching service such as the RB211 and the M45H. Current measures cover extensive additional research into methods for reducing aero-engine noise. These include Government contributions towards the costs of two major programmes in industry: one aimed at demonstrating the possibility of further reductions in noise levels of the RB211 and the other at demonstrating the practicability of developing an ultra-quiet engine based on the M45.

Sir Gilbert Longden: I thank my hon. Friend for that answer. May I take it as a categorical refutation of the canard that Her Majesty's Government are deliberately retarding research into quieter jets? Can my hon. Friend say why it is not yet compulsory to fit silencers to light aircraft engines?

Mr. Heseltine: It is simply not true that the Government are retarding research into quieter engines. We are in the forefront of world pioneering in this respect, and the RB211 has already cost the British taxpayer more than £190 million. A substantial number of the engines used in light aircraft are not manufactured in this country.

Mr. Mason: Will the Minister now honour the obligation he assumed in the House on 22nd October when, in answer to a question from this side, he said—column 679 of HANSARD—that the Government were spending substantial sums on research and development to quieten engines but because he could not then give details he would write to me? Why has he not fulfilled that obligation? What are the specific sums that Her Majesty's Government are now spending on research and development into quieter aircraft?

Mr. Heseltine: I regret that the right hon. Gentleman has not had the letter, but I am pleased to give the House the information that he requested. The present level of expenditure is £1·25 million in the current financial year towards general research, with £750,000 in addition on improvements in the noise characteristics of the RB211 and the M45H engines.

Mr. Wilkinson: Does my hon. Friend agree that these are very small sums compared with the amount envisaged for laying concrete on mud? Will he direct his attention to financing retrofits for existing power plants in service, such as the Spey, which at present manufacturers have to finance largely by themselves?

Mr. Heseltine: I think my hon. Friend will accept that the cost of research into retrofitting does not amount to a great deal. For example, the programme that the British Aircraft Corporation and Rolls-Royce discussed with me amounted to only £600,000. As the profits of BAC were in excess of £6 million, it did not seem unreasonable that it should fund this work from its own resources, particularly in view of the market that could exist for such a product. However, it is not the cost of developing the technology that is expensive. There are much more substantial costs in operating retrofitted aircraft once the work has been carried out and it is this aspect of the problem that makes one think carefully before reaching conclusions.

Mr. Dalyell: Even taking into account the costs that the hon. Gentleman has mentioned, are not sums of £750,000 and £1·25 million paltry compared with the proposed expenditure on Maplin? What does the "think tank" have to say about that?

Mr. Heseltine: The two are not totally comparable. As the House will appreciate, the purpose of developing a third London airport is to deal with a demand stretching through the rest of this century and using both quiet and relatively noisy aircraft. The question is what one does about that generation of aircraft, relatively noisy and with a relatively short life left, for that period during which they continue to exist. So the two issues cannot be equated. There is not the slightest doubt that one has to look


at this matter carefully and bear in mind that the sort of figures I have mentioned for research into hush-kitting are as nothing compared with the airline penalties that would have to be paid by the general public for operating such aircraft that would result from such treatment.

Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

Jute Imports (India and Bangladesh)

Mr. Jay: asked the Secretary of State for Trade and Industry whether the United Kingdom intends to impose tariffs on manufactured jute imports from India and Bangladesh on 1st January 1974.

Sir G. Howe: The Community is discussing an Indian request which we support for the maintenance by the new member States of existing duty-free entry for Indian and Bangladesh jute goods after this year.

Mr. Jay: I take it that the Government are proposing that these exports from these developing countries should be duty free.

Sir G. Howe: I have just answered the Question posed by the right hon. Gentleman. The request made by the Indians is currently under consideration and the United Kingdom has stressed the need for a speedy decision favourable to India and Bangladesh.

Mr. Shore: The right hon. and learned Gentleman must realise that this is a very serious matter and that it puts the credibility of the joint declaration on the Asian Commonwealth countries to the test.

Mr. Speaker: Order. I must insist on the same rules for the Front Bench as for the back benchers. In other words, the point must be put in interrogative form.

Mr. Shore: Is the right hon. and learned Gentleman aware that there have been reports which suggest that the United Kingdom tariff on jute goods from both India and Bangladesh will have to be imposed on 1st January Will he deny that?

Sir G. Howe: It is not yet possible, because of the matters to which I have just referred, to say at what level the tariff on jute goods will be fixed from 1st January. However, the Community has already agreed to substantial reductions in the common external tariff on jute goods from India and Bangladesh as part of the new agreements reached with those countries.

National Union of Mineworkers

Mr. Skinner: asked the Secretary of State for Trade and Industry what plans he has to meet the leaders of the National Union of Mineworkers.

Mr. Peter Walker: I have on a number of occasions met the leaders of the NUM and expect to continue to do so.

Mr. Skinner: If the right hon. Gentleman has the opportunity of meeting the miners' leaders to discuss the problem of the wage claim and so on, will he explain why the Cementation Company, Ltd., a subsidiary of Trafalgar House, can recruit miners at £15 a day to work alongside miners organised by the National Union of Mineworkers at £7 a day? Is it not a crazy system when Fleet Line workers tunnelling a few feet under the Strand can earn £150 a week while Northumberland miners go five miles under the sea for less than £40 a week?

Mr. Walker: Similar comparisons could no doubt have been made in June 1970 when miners were getting £25 a week.

Mr. Raison: Will my right hon. Friend give a breakdown of what is happening to the 600 or so miners who are leaving the industry each week? Are they going to other industries? Where are they going?

Mr. Walker: I do not have this information available. It is a point which should be addressed to my right hon. Friend the Secretary of State for Employment.

Mr. Edwin Wainwright: Does the right hon. Gentleman realise that a cheap answer such as he gave to my hon. Friend the Member for Bolsover (Mr. Skinner) is likely to do only harm to the industry and those employed in it? When will the Government carry out the promise


made by the Prime Minister at the beginning of this year that Britain would burn all the coal miners could produce and thus he would not allow stocks to keep rising? Since the Middle East war, oil is becoming scarce and the Government are looking to the miners to help them out.

Mr. Walker: I still consider that such criticisms of a Government which have increased real living standards for miners more in three years than a Labour Government did in six years, and are now offering a 16 per cent. increase, are not valid.

Mr. Benn: Does the Minister recognise that the party political points that he makes in reply to these questions are no answer to a public which is worried about its energy supplies and which finds the Minister more concerned to deal with the matter as if he were on the hustings than to sort out the problems of the miners?

Mr. Walker: If the right hon. Member for Bristol, South-East (Mr. Benn) wishes to help the country with its energy supplies—

Mr. Benn: See the miners.

Mr. Walker: —he should accept—

Mr. Bean: See the miners.

Mr. Speaker: Order. The Minister must be allowed to reply.

Mr. Walker: —the right hon. Gentleman should refrain from making the type of comments he and his leader have been making during the weekend.

Concorde

Mr. Sheldon: asked the Secretary of State for Trade and Industry if he will make a statement on Concorde.

Mr. Michael Heseltine: As I informed the House on 22nd June, the manufacturers have been studying possible future improvements and the associated production programmes. The studies have just been received, and I and my French colleague will review the position again when their implications have been fully analysed and presented to us.
Meanwhile development is proceeding with the aim of introducing Concorde into service at the earliest practicable date, and we are continuing to support the manufacturers in their sales activities.

Mr. Sheldon: Will the right hon. Gentleman say whether the changes that he is now talking about will affect the final development cost of the Concorde and what subsidies on sales he is considering?

Mr. Heseltine: The whole question of the selling price is a matter on which the manufacturers are making representations to us and we shall have to consider it in the light of what they say. As to future development costs, I made clear in my last announcement of the current estimates of the development costs of Concorde that there were one or two areas still under consideration. If we should decide to proceed in these areas, that would be additional to the costs already announced.

Mr. Michael McNair-Wilson: Leaving aside the technical changes, will my hon. Friend say what further progress may have been made on the leasing arrangements between the North American and South American airlines and BAC?

Mr. Heseltine: I have no firm information about the leasing arrangements. It is for the manufacturers to discuss these ideas and I should be only too pleased to consider anything they might wish to say.

Mr. Bishop: Has the Minister forgotten the almost contemptible way in which he brushed aside requests for a Select Committee by my hon. Friends and myself on the Second Reading and subsequent stages of the Concorde Aircraft Bill? Some of the justifiable concern and fears and some of the misrepresentations which have now been made about the future of Concorde are due to the Minister's failure to publish the kind of information that people want. In view of the more recent views and criticisms of the Public Accounts Committee, will the Minister reconsider his decision not to set up a Select Committee so that we may be assured on Concorde and have the kind of replies which may justify its future and its viability?

Mr. Heseltine: Misrepresentations and allegations have been made about Concorde for many years, and the Labour Government never thought that a Select Committee should deal with them when they had the chance to set one up.

Japan

Mr. Carter: asked the Secretary of State for Trade and Industry if he will make a statement on the recent trade talks with Japan.

Mr. Peter Walker: During my discussions with Japanese Ministers in Tokyo in September I emphasised our desire for an expansion of economic relations with Japan and the need to avoid situations which threaten the balanced development of trade. I pressed for the easing of the remaining hindrances to the rising volume of British exports to Japan and discussed the possibilities of Japanese investment in Britain and co-operative ventures in the field of nuclear energy and in third countries.

Mr. Carter: Is the Minister aware that trade between Japan and the United Kingdom is at present based on very unequal positions? Is he aware that in the case of the motor car industry, for example, Japanese manufacturers obtain virtually unimpeded entry into the British market but that British exporters trying to get into Japan face all kinds of difficulties, not altogether due to Government influence? Does he not agree that, unless the Japanese Government and the internal economic workings of Japan come to terms with the fact that we want equal opportunity with them, retaliatory measures will be taken in this country against Japanese products?

Mr. Walker: I agree that this has been the situation in the past and all sorts of barriers, including tariff barriers, have impeded British exports, including those of the motor industry. I discussed with Japanese Ministers the various practices which have impeded the motor industry in the past and I am satisfied that these have now been eradicated. The difficulty now is to get the level of production in the British motor industry which will enable it to export to Japan. However, the hon. Member was correct when he referred to past customs, but these have been dropped by the Japanese and there is now considerable opportunity there.

Miss Joan Hall: I hope my right hon. Friend believes that there will be increased opportunity, because many British industrialists have felt that it is easier to get a camel through the eye of a needle

than it is to get goods into Japan, particularly with regard to textiles—

Mr. Speaker: Order. This is Question Time.

Miss Hall: Does my right hon. Friend believe that it will be easier for British suiting material and made-up British cloth to get into Japan than it has been in the past?

Mr. Walker: Yes. The illustration that things generally are improving is that in the first 10 months of this year our exports to Japan were up by 80 per cent.

Government Aid

Mr. Marten: x asked the Secretary of State for Trade and Industry what is the total amount of Government aid in all its aspects to industry in the last 12 months.

Mr. Peter Walker: All expenditure by my Department is in one form or another designed to assist industry. In the 12 months to the end of September this year, the total expenditure by my Department was approximately £1,000 million. I will send my hon. Friend a detailed breakdown of this expenditure.

Mr. Marten: I thank my right hon. Friend for that Answer. The Question was phrased in a difficult way for his Department to understand. Will the sum which we are likely to get from the Common Market Regional Fund, which will be relatively small compared with the enormous figure my right hon. Friend mentioned, be dovetailed in with the large amount of Government aid?

Mr. Walker: My hon. Friend will know that negotiations on the amount involved have not been finally concluded. When that has been done we shall fit it into the general regional policy.

Mr. Dell: Has the right hon. Gentleman seen the recent comment made by the Chairman of the CEGB to the effect that public money should he injected into North Sea oil development? So that such development should not be at the mercy of the resources and priorities of the oil companies, has he any comment to make about that?

Mr. Walker: A considerable amount of money has been put into North Sea


oil development. One of the activities of my Department has been to promote the use of British industry, which has obtained considerable benefit from that development.

Companies House

Mr. Fowler: asked the Secretary of State for Trade and Industry what representations he has received concerning the plan to transfer Companies House from London to Cardiff; and whether he will make a statement.

Mr. Norman Lamont: asked the Secretary of State for Trade and Industry whether he will make a statement on his plans to move part of Companies House out of London.

Sir G. Howe: I have received representations from a number of financial and other institutions, and I am meeting a group of users under the aegis of the Bank of England to discuss these representations.
The decision to move some of the work of Companies House out of London was taken because unless this were done it would not be possible to continue to provide a satisfactory service beyond the next two years.
Extensive facilities for searches will be maintained in London and the final result will be an improvement in efficiency for almost all users.

Mr. Fowler: In view of the heavy opposition to the move of Companies House, as reported in the Sunday Times, will my right hon. and learned Friend say exactly what kind of consultations took place with its regular users before the transfer was made?

Sir G. Howe: Extensive consultations and trials of the equipment in question have been held with a wide range of the principal users of research facilities for some time.

Mr. George Cunningham: Will the right hon. and learned Gentleman agree that because Companies House is in the nature of a shop or library, its whole raison d'être being that the public should have access to it, it should have been the last kind of Government Department to be dispersed? Will he make publicly available or at least available to hon.

Members, the management study conducted in 1971? Will he say upon what basis the Government believe that staff will be available in Cardiff who are not available in London to fill the vacancies?

Sir G. Howe: I shall deal first with the hon. Gentleman's last point. It is likely that staff will be available in Cardiff upon the basis of the figures disclosed in the Hardman Report and upon the basis of an objective comparison of the likely availability of labour in South Wales and Central England. I am aware of the importance that hon. Members and people outside the House attach to the continued efficiency of a search service of this kind in London. The steps which are being taken and the decisions which have been made have been announced with that fully in mind.
I ask hon. Members and those outside the House to take close account of the extent to which information will be available. I have made available a consultative document describing this in some detail. Information will continue to be available in London. Indeed, more information will be available, with more copies for more people to use. We have not taken this decision simply by brushing aside the points raised by the hon. Gentleman. On the contrary, we are determined to improve the service which will eventually be available.

Mr. Lamont: Does my right hon. and learned Friend agree that the difficulties concerning Companies House reflect the fact that we have a fiscal system which gives too much incentive to incorporation? Does my right hon. and learned Friend agree that there are too many companies being formed unnecessarily by too many people? Will he bear in mind the possibility of making a distinction between the arrangements for quoted and unquoted companies and keep the arrangements for the latter in London?

Sir G. Howe: I take note of both my hon. Friend's points. I will bear both in mind.

Mr. Frank Allaun: Is the right hon. and learned Gentleman aware that many research organisations which naturally have their headquarters in London, such as the Labour Research Department, depend on regular visits to Companies House? Perhaps the Minister thinks that


it is only companies which are interested in Companies House. That is not so. The Opposition are interested, too. It would be difficult for such organisations to send representatives regularly to Cardiff.

Sir G. Howe: I bear in mind that the hon. Gentleman and some of his hon. Friends are amongst the first, and rightly so, to press upon the Government the need to decentralise such Government functions as can properly be decentralised. I bear in mind what he says about the importance of information which is available at Companies House continuing to be available in London for all inquiries.
I ask the hon. Gentleman and the House to take account of the extent to which all new information coming in will be available on film, together with much existing information, including annual returns, annual accounts, lists of directors and of shareholders for the last three years, particulars of directors for the last seven years and basic documents relating to the company as a legal entity with its memorandum and articles, share and loan particulars, mortgages and charges. There will be an extensive availability of basic information which will be required by the hon. Gentleman and his hon. Friends as well as by other inquirers.

Mr. Millan: Is it not a fact that the trouble is that many companies do not fulfil their obligations under the Companies Act? While I fully agree with my hon. Friend that there must be facilities available in London for research and other purposes, will the right hon. and learned Gentleman not give too much attention to special pleading which is often based on the proposition that nothing should be moved out of London? Will he bear in mind that any dispersal of civil servants from London is bound to attract special pleading and that he should not pay too much attention to it?

Sir G. Howe: I am grateful to the hon. Gentleman for putting that part of the argument into perspective. I acknowledge the force of his point. Much of the trouble springs from non-compliance by companies with the existing provisions of the law. That is one of the matters to which we are giving our close attention

and to which we shall give attention in the Companies Bill.

Mr. Cunningham: On a point of order. In view of the unsatisfactory nature—

Mr. Hugh Jenkins: rose—

Mr. Cunningham: —of the replies from both Front Benches, I give notice that I shall raise the matter on the Adjournment.

Newsprint

Mr. Sydney Chapman: asked the Secretary of State for Trade and Industry whether he will make a statement on the world-wide shortage of newsprint, with particular reference to the situation in the United Kingdom, and the arrangements made to help newspapers in difficulty.

Mr. Anthony Grant: Since the current shortage of newsprint is world-wide the scope for short-term action is limited. However, I understand that arrangements made by the newspaper industry to ensure that newspapers receive essential supplies are continuing to work satisfactorily. We shall keep the position under review in the light of continuing discussions with newsprint producers and the newspaper publishers.

Mr. Chapman: Has my hon. Friend noticed that the result of the shortage of newsprint in British newspapers and journals is that a growing proportion of them are devoting more space to advertisements and a lesser proportion of space to news stories? Does he accept or reject that trend? Is there a case for limiting the maximum amount of space which can be made available for advertisements or relaxing the liability of the newspapers to pay VAT?

Mr. Grant: It is not for me to pontificate on how newspapers use the news print available to them. The industry has traditionally wished to sort out its own affairs. It is doing so at present. The Government are ready to enter into discussions with the industry if it so wishes. At the moment it is working reasonably satisfactorily.

Mr. Lipton: Is it not an advantage that as a result of the current shortage of newsprint the newspapers will be able to print much less rubbish than they are now printing?

Trade Practices

Mr. Greville Janner: asked the Secretary of State for Trade and Industry whether he will list the unfair trade practices which he is initially proposing to ban or curb in accordance with his new powers under the Fair Trading Act.

Sir G. Howe: Under the Fair Trading Act 1973 it is the function of the Director General of Fair Trading to make any such proposals.

Mr. Janner: Do the Minister's functions under the Act include the passing of matters to the Director General? Can the Minister indicate which practices the Director General is considering and whether they include the practice of double pricing?

Sir G. Howe: The Director General has been in office for less than three weeks. It is plain that he is still surveying and drawing together the various matters which he will be considering. It is for him—and it is important that this should be said—to set out his new pattern of priorities in the new and important office which he holds.

Nuclear Reactors

Mr. Palmer: asked the Secretary of State for Trade and Industry what recommendations have been made by the Nuclear Power Advisory Board on the choice of reactors for the next stage of the nuclear power programme.

Mr. Peter Walker: The Nuclear Power Advisory Board has not yet made any recommendation on this subject.

Mr. Palmer: In view of the possibility that American light water reactors may be recommended, will the right hon. Gentleman say when the board will be meeting? In view of the vast public investment in this business, will the reports of the board be made available to the House of Commons?

Mr. Walker: The Nuclear Power Advisory Board is a body which gives advice to me, and its advice is given in confidence. I shall be the Minister responsible for the decision. The board is having regular meetings at the moment—there is to be a further meeting this week, and there will be other meetings

between now and the end of the year—and I hope to come to my conclusions on this topic probably somewhere about the end of January or the beginning of February.

Mr. Benn: As a decision to buy American reactors would be taken by the whole community as a major political act which would require the fullest possible discussion in the House before a final conclusion was reached, not only because of the effect on British industry but because of the safety factors involved, may we have an assurance that the Minister will put the facts upon which he would be reaching a decision before the House for debate before he himself reaches the final political decision?

Mr. Walker: There are plenty of opportunities for the House to debate this matter. The choice of reactor is a highly technical subject, and, of course, a major decision is involved for British industry. I assure the House that, before I come to a decision, I shall give the House a detailed explanation of it. At the end of the day, a decision in this sphere must be a Government decision. Whether the House will wish to reject that decision is a matter for the House, but I give an assurance that I shall make available to the House the detailed basis upon which I come to my decision.

Service Charges

Mr. Kaufman: asked the Secretary of State for Trade and Industry if he will introduce legislation making it illegal for firms to impose services charges for services which are not in fact supplied.

Mr. Emery: The civil law already provides remedies for consumers who pay for a service and who do not receive it. The Law Commissions are studying the problems which arise from the use of exclusion clauses which restrict the seller's contractual liability.

Mr. Kaufman: Does the hon. Gentleman regard as tolerable a state of affairs in which a Manchester television firm called in to service a customer's television set sends an engineer without ascertaining whether the customer is in and then, finding the customer not at home, nevertheless makes a service change and even includes VAT? This is the economics of bedlam.


When will the hon. Gentleman do away with it?

Mr. Emery: Obviously, I cannot comment on a particular case without knowing all the facts—the time when the hon. Gentleman's constituent asked the repair company to call, and so on—but I assure the hon. Gentleman that the Government realise the problems which have existed in this connection and have now simplified court procedures so that consumers may press small claims, such as this would probably be, with legal assistance.

Aircraft Noise (Insulation Grants)

Mr. Michael McNair-Wilson: asked the Secretary of State for Trade and Industry how many householders living in the inner area around London Heath row and London Gatwick airports have been allotted 100 per cent. noise insulation grants; and whether he will give the number of persons living outside that area but close to the airports who have applied for the 75 per cent. grant.

Mr. Michael Heseltine: Up to 30th September 1973 the number of 100 per cent. grants approved at Heathrow was 850; at Gatwick 57. At Heathrow, 2,403 applications were made for 75 per cent. grants; at Gatwick 260. In addition 8,127 grants were paid at Heathrow before 14th September 1972 at the old rate of 60 per cent.

Mr. McNair-Wilson: Is my hon. Friend satisfied that 100 per cent. grant covers a wide enough area? Second, what thought has he given to asking the British Airports Authority to take on the whole of this noise insulation grant scheme, since it is the possessor of the airports?

Mr. Heseltine: In fact the British Airports Authority has taken on and administers the scheme in respect of Heathrow and Gatwick. There are other schemes at Manchester and Luton, which are not the subject of the Question, and they are administered by the local authorities. As regards the working of the scheme itself, we recently modified and extended its substantially. We are constantly looking at it—we shall be looking at it again in the fairly near future—and any points which hon. Members put to me will be taken into account.

Steel Supply

Mr. Woodhouse: asked the Secretary of State for Trade and Industry if he will direct the British Steel Corporation to ensure that when steel is in short supply it should be rationed, with particular regard to the needs of long-established customers.

Mr. Peter Walker: I have recently discussed the general pattern of steel shortages with the BSC, the CBI and steel producers and consumers. I am confident that the BSC is allocating the available supply as fairly as possible.

Mr. Woodhouse: I appreciate my right hon. Friend's reply, but does he not regard it as unreasonable that the British Steel Corporation should completely refuse to a long-standing customer an allocation in the first period of next year, as occurred in a case in my constituency of which I have sent him details?

Mr. Walker: I cannot answer on the details of my hon. Friend's constituency problem, but I shall see that careful consideration has been given to that application. There may be factors of which I am not aware. We have created a sort of clearing-house organisation with stockists and the BSC so that such cases are dealt with.

Mr. Barry Jones: Would it not be wise also to aim for a higher annual tonnage target in the steel strategy announced by the Secretary of State? Would not that mean that there would be fewer redundancies in the steel industry and that there would be a better chance of steel workers retaining their jobs in borderline cases such as that of the Shotton steelworks?

Mr. Walker: In my original announcement I made perfectly clear that the strategy was flexible and that, within that strategy, the corporation could decide what variations it wished to make. I am sure that it will do just that.

Mr. Stokes: Is my right hon Friend aware that there is something approaching growing alarm and despondency in the West Midlands at the severe shortage of steel which is now affecting many manufacturers there, large and small? Will he deny the rumours that British steel is being exported to Europe and then


reimported and sold on the black market?

Mr. Walker: If my hon. Friend has specific evidence of that being done, I shall be very glad to receive it. In practice, our total exports from a relatively small proportion of our total production, and our exports and imports of steel, both relatively low figures, are broadly in balance.

Steam Generating Heavy Water Reactor

Mr. Evelyn King: asked the Secretary of State for Trade and Industry for how long the steam generating heavy water reactor, as completed at Winfrith, has been in operation and with what results; and what information he has as to the further use of this prototype by the Central Electricity Generating Board.

Mr. Emery: The steam generating heavy water prototype reactor at Win-frith has been in operation since 1967 and to date has produced a total of 2,250 million units of electricity. The operating performance of the reactor has been good. As well as acting as a power producer, it has served as an experimental facility to provide irradiation and engineering information for development of a commercial version of the reactor. The Atomic Energy Authority envisages that the Central Electricity Generating Board will continue to purchase electricity from the reactor in the foreseeable future.

Mr. King: I am obliged to my hon. Friend for that answer, but will he bear in mind that this generator, unlike some of its American counterparts, is wholly safe and for five years has had a faultless record? Moreover, about £100 million has been spent in the research leading up to it. If it were not further used and developed, would my hon. Friend be satisfied that that £100 million had been usefully spent?

Mr. Emery: My hon. Friend is right in the figure which he gives the House. Obviously, it has been right that we should ensure that the SGHWR was the subject of development expenditure in order to see that it would give every potential for further development. Consideration of that further development is at present being undertaken by my right hon. Friend

the Secretary of State and the Nuclear Power Advisory Board.

Mr. Palmer: Is not the Minister aware that if a steam generating heavy water reactor station of a commercial nature were now constructed on the British system, as recommended by the Select Committee on Science and Technology four years ago, it would probably be unnecessary to go for American light water reactors?

Mr. Emery: I do not think that the hon. Gentleman can get me at the Dispatch Box to make a decision which now has to be made by the board and my right hon. Friend.

Oral Answers to Questions — SUB JUDICE RULE

Mr. Maclennan: On a point of order, Mr. Speaker. I wish to put to you a point on which I would not necessarily expect an immediate ruling. It concerns the reply which the Under-Secretary of State for Trade and Industry gave on Question No. 7, to my hon. Friend the Member for Rugby (Mr. William Price).
During his reply, the hon. Gentleman referred to the successful prosecution of three companies and went on to refer to an appeal pending in the case of another and to the fact that the Director of Public Prosecutions had taken up the respondent's case.
Whilst I fully recognise that the House has on a number of occasions recently expressed the desire that the sub judice rule should be interpreted as broadly as possible and with considerable discretion from the Chair, in matters of criminal cases the discretion is clearly less wide. I think that it merits your consideration whether or not these references by the hon. Gentleman prejudiced the hearing of the case and whether they should not have been made in this House.

Mr. Speaker: I will consider the point raised by the hon. Gentleman. I will examine the OFFICIAL REPORT and, if necessary, say something to the House about it at a later stage.

OIL SUPPPLIES

The Secretary of State for Trade and Industry (Mr. Peter Walker): In my statement to the House on 24th October, I


informed the House that, in view of the potential dangers to our Middle East oil supplies, the Government had decided to take controls over the export of oil and oil products and to bring contingency plans to introduce rationing to a state of readiness. I also informed the House that we would prepare legislation to allow controls upon the distribution of petrol and oil. This legislation has now been prepared and will be introduced tomorrow.
At the same time, we urged voluntary savings to take place in energy consumption. Important actions have been taken by a number of the major users of energy, including the power stations and airlines, and on 14th November the Government made orders banning the use of certain types of space heating and advertising signs.
We now face a situation in which all our energy supplies are at risk—coal and electricity, because of industrial action, and oil, because of continuing uncertainty about production in the Arab countries.
We enjoy substantial stocks of both oil and coal. But, if we are to guarantee the minimum impact upon employment and industrial production throughout the coming winter, further action is now necessary to conserve stocks.
We are, therefore, immediately directing the oil companies to reduce deliveries of all the main oil products across the board by 10 per cent. compared with the corresponding period last year. In the case of petrol stations the figure will be 10 per cent. below last year but apportioned on the basis of deliveries in September of this year. This will be implemented from tomorrow. We have prepared a list of essential services and industries; and whilst these will also be subject to the 10 per cent. cut initially, provision will be made for adjustment to meet their essential needs. The 10 per cent. reduction will not apply to public transport.
The cuts to garages need not cause undue hardship or disruption because of the considerable scope for reducing private and non-essential motoring.
In view of the present shortage and the considerable savings of petrol which can be made, I must ask everybody, as from today, first, to reduce weekend motoring to the minimum, secondly, to

cut out motoring on Sundays other than when the journey is absolutely essential, and, thirdly, to observe a voluntary speed limit of 50 miles per hour. I am introducing an order prohibiting the purchasing of petrol in cans.
I have consulted the CBI, the oil companies and the motoring organisations and they have agreed to co-operate in every way possible to see that these reductions of our energy consumption are obtained with the minimum of disruption.

Mr. Benn: Is the right hon. Gentleman aware that any arrangements made that are fair and ethical and are seen to be fair and ethical will obviously command public understanding?
First, why were there no consultations with the trade unions or with those organisations representing old people, who might very well be affected by cuts in oil supplies? Secondly, do the Government intend to assume responsibility themselves for seeing that priority in terms of production and transport are carried through, particularly in the rural areas, under their own auspices, or are they leaving this aspect entirely to the oil companies to deal with?
Thirdly, how does the right hon. Gentleman visualise that the garages, which will be applying a 10 per cent. reduction, will be able themselves to see that key categories of people, if there are to be such categories, receive the petrol they need? Fourth, what action is being taken against the possibility of a black market, which certainly developed in 1956 when we last had petrol rationing?
Finally, does this situation not indicate the need for the Government to be much more flexible in their dealings with the miners and the electrical power engineers in ensuring adequate supplies?

Mr. Walker: We have discussed the question of special categories with the oil companies. They are satisfied that, with the relatively small reduction of about 10 per cent., there will be no difficulty in keeping essential services, such as those of doctors and nurses, for example, properly supplied. They have no doubt that they are perfectly capable of dealing with this. Likewise, if reductions are made in weekend motoring and people comply with the 50 mph speed limit. the combination of these two factors alone will meet most of the 10 per cent.


cut in supplies. The Government have power of direction under the emergency powers in force, and under the legislation being introduced tomorrow we shall continue those powers and will be able to introduce rationing if necessary. We have made it clear that if rationing is essential we shall not hesitate to introduce it, but at the moment it is not essential. We hope that the situation in the Middle East will improve and enable us to remove these restrictions. If the oil supply situation deteriorates and the coal and electricity situations deteriorate, further action will be needed.

Mr. Skeet: While I congratulate my right hon. Friend on introducing the legislation tomorrow, will he bear in mind that one of the principal matters he has to consider is the steepening price of oil, which will have a serious effect on the balance of payments? Will he remember that the housewife will have to pay much more for gas oil because the rebates have been abolished and for consignments under 1,000 gallons an increased price will be charged?

Mr. Walker: Obviously, the increased prices being charged by Middle East countries will have a considerable impact on prices here and on our balance of payments.

Mr. Grimond: If, as seems possible, the situation in the Middle East continues unfavourable for some time, is the right hon. Gentleman satisfied that this policy will be sufficient? Is there not some danger of having the disadvantages of rationing, such as hoarding and the black market, without curtailing demand? What about the essential service industries? Should not the 10 per cent. be more flexible, for example, for the countryside, agriculture and fisheries, which are extremely dependent on oil? Will the needs of such sectors be taken into account?

Mr. Walker: I am sure that the 10 per cent. reduction can be met and coped with in almost every sector. I point out to the right hon. Gentleman that the measures we are now taking will in combination be far greater than those taken by any other European country and by the United States and Japan. This is because we consider it advisable to con-

serve our stocks so that there will be no major rundown. But the position is aggravated by the present situation in the coal and electricity industries.

Mr. Rost: Is there not evidence that a minority of greedy and selfish consumers have deliberately chosen to ignore the Government's request for voluntary restraint? What assurance can we have that they will now do so? Furthermore, what depletion of the nation's strategic reserves of oil has taken place in the past days by this hoarding?

Mr. Walker: The total effect of such hoarding will have been relatively small because only 15 per cent. of our total oil supplies is distributed through the garage system. Therefore, the total impact on oil resources is relatively the same. The combination of the Home Office regulations already in existence on hoarding and the banning of the supply of petrol in cans in the order I am making today will prevent such abuse.

Mr. Ewing: Is the right hon. Gentleman aware that his statement is very old news? Can he explain how it was that in the middle of last week the oil distribution companies were sending out letters almost word for word the same as the Minister's statement? Does he appreciate that I read one such letter on Saturday morning telling my local garage that distribution was to be cut by 10 per cent.? Is he so divorced from the discussions that take place that he does not know that there has been a rationing scheme worked out by the oil companies and that they are issuing discs to their own customers and will serve only those customers? Is it not dishonest for him to come here and pretend that rationing is not in effect? Why do not the Government take responsibility for this?

Mr. Walker: The hon. Gentleman has got it all wrong. The situation varies considerably from one oil company to another. Certain small companies have had to stop deliveries entirely. Others have continued supplies at the normal level, and one sent out a note to its customers on Saturday stating what its future intentions would be. The Government are now taking the action that is necessary to direct the supplies of the oil companies. This is now under Government direction, and the Government


have the powers to direct further supplies to where they are needed. The Government are taking the responsibility, in collaboration with the oil companies. We know that pooling arrangements have been made between the oil companies to ensure that those who have been hard hit will get further supplies.

Mr. Walters: Would my right hon. Friend not agree that the most recent statement by the Middle East oil-producing countries was reasonably favourable and encouraging towards Britain? Does this not give further support for the Government's decision, taken on purely political grounds, to state their policy on the Middle East situation three years before any oil policy was evolved by the producer countries?

Mr. Walker: While the news yesterday that further cuts would not be imposed on this and other countries is welcome, it means that there will be a considerable drop in oil supplies to Europe and the world at large during December. It would be the Government's hope that the cuts at present in force will be dropped and full supplies renewed.

Mr. McBride: Is the right hon. Gentleman aware that I have had representations from my constituents about the energy saving scheme as it affects chapels and churches? To remove any doubt or sense of disquiet, may I ask the right hon. Gentleman to exempt from the ban on space heating churches and chapels in Wales so that these places of worship may be properly heated, at the very least on Sundays?

Mr. Walker: There is provision for special application to be made in such circumstances. I would have thought a much better answer would be large congregations and more noisy hymns.

Sir J. Rodgers: Will my right hon. Friend consider imitating the example of Belgium and closing the petrol pumps on Sundays if the situation deteriorates?

Mr. Walker: No, Sir, because I think that creates many impossible situations, for example for people in the medical professions, nurses and others. I do not think it is a sensible method.

Mr. Douglas: Will the right hon. Gentleman give the House details of the deterioration in our stocks position since this crisis began? Will he not accept that a 10 per cent. across-the-board reduction in supplies will be detrimental to the rural areas of England, Scotland and Wales? Ought there not to be some weighting to take this into account?

Mr. Walker: There will be no great problems or handicaps as a result of reducing to 90 per cent. of normal consumption. It is difficult to give day-by-day estimates of stocks, but the latest estimate I have is that the stock position in the United Kingdom is still over 70 days. There has not been a massive deterioration in the position.

Mr. Costain: Will my right hon. Friend bear in mind the need to help certain categories, especially the disabled, to get to work? Will he make sure that the arrangements available for such people are fully explained?

Mr. Walker: Yes.

Mr. Strang: Is it not high time that the Government set about encouraging local authorities to provide a better public transport system instead of discouraging them as they are doing at present? Will the Minister take urgent steps to enable them to employ the number of workers they need, to subsidise fares and to provide a better service?

Mr. Walker: There has been a whole range of measures taken by the Government in terms of subsidies and financial help to British Railways, local authorities and infrastructure grants designed to improve the public transport system.

Mr. Benn: Will the right hon. Gentleman please tell the House whether he intends to publish details of the Government's plans, priorities and intentions so that members of the public know what the Government intend to do? Will he say whether members of the public or hon. Members can bring to his attention cases of difficulty that will come to light? Will the Government have the powers in the legislation to allow them to deal with such problems as are almost certain to come to light in a voluntary arrangement?

Mr. Walker: I am using Government powers to make a 10 per cent. cut. The powers exist already. I shall be publishing in full this afternoon the details of the special categories, and I am grateful to the right hon. Gentleman for mentioning that. I advise those in special categories or those who wish to be considered for such categories to make an application to the regional office of the Department of Trade and Industry. That is the best and quickest means of making the application.

THE ECONOMY

3.45 p.m.

Mr. Harold Wilson: I beg to move,
That this House has no confidence in Her Majesty's Government's management of the economy.
It is a further mark of the Prime Minister's disdain for this House, and his refusal to consider himself accountable to any authority, at least on this side of the Channel, that it has taken a motion of censure to get him on his feet in Parliament. He will make appearances on television and Press announcements but will not make statements in Parliament if he can help it. This is stages 2 and 3 all over again.
This motion was tabled last week to censure the Government on the bankruptcy of their policies, laid bare by the panic announcements of last Tuesday morning and the catastrophic trade returns which produced them. Since it was tabled another indictment falls to be laid—the publication on Friday of the Retail Price Index for October.
At a time of the year when food prices are usually static and in some years have fallen we had the highest increase in food prices for 18 years. The food price index is now more than 18 per cent. higher than a year ago and nearly 45 per cent. higher than in June 1970. We had an increase of 3.6 points—that is 2 per cent.—in the overall retail price index. That is the biggest increase since April 1971, which was one of the highest in history.
The index for housing costs this month rose five points and is now 35 per cent. above June 1970. If mortgage rates were included in the index the rise in the housing index and overall index would have been still greater. The Government will no doubt have done their miserable monthly calculations about the fall in the value of our currency of which they are the custodians.
Taking the value of the Labour pound in June 1970 as 20 shillings, 100 pence, I estimate that the latest figures mean that the pound has now depreciated to under 75½ pence. The Prime Minister will perhaps be good enough to confirm this or to give his own figure. The Government were elected on one mandate only—prices. By this is meant the cost


of living, including food, rents, fares, school meals and mortgages.
There was no other mandate. Certainly there was no mandate for industrial relations, although the Government's record in quadrupling man days lost through disputes is just as abysmal a failure as their record on prices. No other mandate secured their election. Certainly it was not entry into Europe, for which the Prime Minister had no mandate whatever. He sought no mandate for it in the General Election. He is there because of the cynically broken covenant with the British people over prices and for no other reason.
Out of concern to leave time for others, I will not remind the House of the detailed and specific pledges that the right hon. Gentleman gave, but will just quote two things. The first is one sentence from his manifesto, "A Better Tomorrow"—the tomorrow which after three-and-a half years has now dawned. Here is the quotation, right opposite the signature:
We have become resigned to the value of the £ in our pockets or purses falling by at least a shilling a year. For a year to pass without a crisis has become cause for congratulation.
"A shilling a year", he said—5p a year. In less than three-and-a-half years the average rate has been 1s. 8d., over 8p per year, and the rate has now quickened. The rate for food prices has been more than 18 per cent. over the last year alone. Those 12 months covered the whole period of the fraudulent freeze, and the whole period of stage 2. The annual rate of increase over the past six months has been 10½ per cent. It is rising with each month that passes.
The other quotation is from the right hon. Gentleman's famous speech at Central Hall, Westminster, on 1st June 1970. He forecast the 3s. loaf. We have this very day got the half-crown loaf. When he spoke the loaf was 1s. 10d., 9p; today it is 12½p, and all the experts say that it must go up again soon.
Suppose the reality, not the fiction, had been the right hon. Gentleman's message to the housewives of Leicester? Suppose he had said, "Vote for me, and I will have 5s. from you out of every £ before Christmas 1973". That would have been the reality, and Conservative Members would not have been sitting on the Government benches today.
With our now 15s. pound, at even the average rate of decline of the past three-and-a-half years under the present Prime Minister—I must give him the benefit of taking the average rate in his period of Government—if this policy were to endure the full five years of this Parliament, the Government pound would be at best down to 66¾p after five years—a cut of one-third. That is taking the average rate of 8 per cent. But as the rate is speeding up, at recent rates the pound would be worth even less than two-thirds after five years. If, Heaven forfend, the Tory Party had another period of office, at the end of that period—still taking the slower average rate of the past three-and-a-half years—the Tory pound would then have fallen, still at that 8 per cent. rate, to 44½p.
On prices, as on housing, the Tory Government were conceived in deceit and have compounded that deceit by their treatment of those whose trust created them.
The Prime Minister is now so remote from those whose support he canvassed that he even denies the very appeal that won him that support. I told the House in the debate on the Address that in a party television programme the Prime Minister denied having promised that he would bring prices down. I quoted to the House his election week pledge
to break into the wage price spiral by acting directly to reduce prices".
He did not reply to that challenge.
One of the reasons why the right hon. Gentleman lost all authority to appeal to the British people to abandon self and all sectional advantage is that he has not only betrayed the pledge that won him the election but even denies now that he made it. Of such is born cynicism about democratic politics in this country. Of such is born the danger of a lurch into false and spurious doctrines forswearing democracy.

Mr. Norman Tebbit: rose—

Mr. Wilson: Perhaps I could address myself to the Tory back benchers. What would be appropriate would be a period of decent reticence from Conservative back benchers, for they are in this House only because of faithless pledges made by the Conservative leader. They rode into this House on that platform—[Interruption.] And that includes every


hon. Gentleman who is interrupting. I make one suggestion to them, and if they answer it I shall give way to them. I suggest that each Conservative back bencher books the largest hall in his constituency and throws it open to all the people. I suggest that he then reads to them his 1970 election address. Let him read out the relevant parts of the Tory manifesto.
I do not suggest that Conservative back benchers should read out all the Prime Minister's specific pledges—that would take far too long and probably the hall would not be heated. But let them read the record of last week—the trade figures, the 13 per cent. bank rate, the credit squeeze, the cost-of-living figures. Then let them apologise—or, better still, resign, and this House will be a cleaner place.

Mr. Tebbit: rose—

Mr. Wilson: I have heard interventions by the hon. Member for Epping (Mr. Tebbit) before. This is a serious debate. The hon. Gentleman may have no confidence in the Prime Minister to reply, but it is the Prime Minister who will be replying.
I shall return to the question of the cost of living later in my remarks.
The occasion for this debate was the announcement of the trade figures, the state of emergency, and the Government's measures—the 13 per cent. bank rate and the credit squeeze measures last Tuesday. The announcement of the state of emergency was, and was intended to be, a diversion from the breakdown of economic policy, an attempt to shift responsibility. The only case for proclaiming it then could have been oil. The Government knew more about the oil situation then than they knew a week earlier, before the by-elections, when they knew that it would be wise to conserve oil stocks and electric power. They did not act a week before last Tuesday.
The City Editor of the Daily Telegraph, Mr. Kenneth Fleet, who is no supporter of the Labour Party, wrote clearly last Tuesday:
Last week's bank figures revealed another surge in lending but opportunity to act was not taken.
He cited the official reason of the Government for not acting—that the

trade figures would not look appallingly bad".
The Prime Minister knew the trade figures, of course. The Government admit that. Mr. Fleet went on:
In truth there were four other reasons for postponing the inevitable—all of them by-elections.
The trade gap, when published, was £298 million, by far the worst in all our trading history. The Secretary of State for Trade and Industry rushed to claim a triumph. Diamonds are a Secretary of State's best friend—and it was all diamonds. Something was sure to turn up—and it did the next day. The disclosure was that the deficit was understated—only, it is true, by a matter of £75 million or so. Everything would be all right on the night. On that day when the figures were given the Secretary of State's speech was entitled "Britain—Towards a New Commercial Greatness". The right hon. Gentleman made his speech, and the next day the Stock Exchange panicked.
That disclosure seems to suggest a true figure—if the Secretary of State will accept my rather rough arithmetic—of about £370 million, give or take a few million. That happens to be 12 times the £31 million visible trade deficit published on the Monday before the 1970 General Election—the £31 million deficit which led the present Prime Minister to rush into bloodcurdling prophecies of apocalyptic doom. He said.
With imports rising nearly twice as fast as exports our surplus is in danger of slipping away … It is becoming increasingly clear that we are over the best.
His finest hour.
Lord Cromer was beside himself, and beside the right hon. Gentleman opposite. I see that he has now decided to give up his incumbency of what has been the highest ever recorded fee for a party political broadcast.
That month's trade figures made up part of a £650 million surplus—the surplus which we were told was "slipping away". In fact, it was found that the deficit was partly caused by export under-recording. With a proper allowance for relevant factors—without approaching the style of the Secretary of State for Trade and Industry—the month's figures were slightly on the positive side. But £31 million deficit then, in the Conservative leader's


view, was catastrophic, while £370 million deficit today is one of those intriguing "problems of success". Were it in his nature to put a £370 million deficit in perspective, he would find that over the past 20 years in only five years—1960, 1964, 1967, 1968 and 1972—has the annual figure been as bad as this figure for one month. That should be a matter which the Government Front Bench and Conservative back benchers should take seriously.
The Economist calculates that the current balance, taking this October against last, is now at an annual rate of £2,760 million worse than a year ago. On a three months' comparison since July there has been a worsening in annual terms of £528 million. Of course, it is not a question of one month only. The accumulated export/import gap this year is £1,650 million. The rate has worsened each quarter, and there are two months still to go.
We further indict the Government for the action which they took last Tuesday; namely, the announcement of the 13 per cent. bank rate, and credit squeeze. We have never seen a 13 per cent. bank rate before. Not since 1914, and then only for a few days, have we seen it rise to double figures. We remember what hon. Members opposite said when it was 8 per cent. and 7 per cent. Their excuse, except when they claim it as a triumph, was that it was necessary to counter the effect of the trade figures. This was 15 months after a major devaluation, which reached a 20 per cent. major devaluation abroad, against West Germany by 30 per cent., by a Government who had inherited a rising payments surplus which in 1971 had reached over £1,000 million. The Heath pound was, therefore, 25 per cent. devalued at home and between 17 and 20 per cent. devalued abroad.
Our payments deficit is being met by borrowing—public industry borrowing, local authority borrowing—on terms which are likely to aggravate our payments problems in future years. To adopt a phrase from the Economist, the present Government are living on Euro-tick. The Government must act to reverse the trade position. If they fail to do so, no amount of borrowing will prevent the floating pound from plummeting still further, thus adding more and more to import

costs, prices, wage demands and inflation at home.
The second part of the current inflation is caused by the fact that the floating pound has sunk so low. Because the Government refused to act by major policy changes, they were forced to provide costly and temporary protection for sterling by the 13 per cent. bank rate and the credit squeeze—and at what cost? First of all, at the cost to investment. Despite their success claims, which are based on surveys of investment intentions, which nobody queries, investment in manufacturing industry on the ground in terms of factories, plants and machinery has still not got anywhere near the 1970 figure. The Government's own figure was a long way below 1970 and 1969. It is even a long way below 1971. The investment intentions which Ministers quote are still a drawing-board order book affair. The effect of this high interest rate on industrial costs is that one industry after another has published its estimates of how much further it will increase its prices. Food processing, transport, consumer goods, engineering—none escapes.
On top of increased interest rates we have had this week the second round of steel prices this year, with more to come—steel prices which month by month will work their way through the cost and price structure of every industry, from engineering to transport, from canned goods to construction. Penal interest rates will force up industrial costs and prices, and hence the cost of living. They will force up the cost of government, both central and local government, the social services, house building and rates. Perhaps the Chancellor will give us his estimate of the extent to which all these will go up on this amount of interest rate.
Borrowing rates have not settled yet; figures of 14 and 15 per cent. have been mentioned as possible rates for local authority borrowing. Mortgage interest rates to owner-occupiers are already 11 per cent. Can Ministers offer anything other than hope and prayer to dispel the fear of a further rise? Do they yet realise what this means for a young family, a family seeking a house, or a family who bought a house last year at an exorbitant price, with an 8½ per cent. mortgage, and then made the painful economies and sacrifices necessary to keep their household budget in balance


—sacrifices more painful than anything which right hon. Members opposite are willing to make?
Come hell, high water or 13 per cent. Bank Rate, one thing which the Government will not sacrifice is their discredited ideology. A 13 per cent. Bank Rate is the effect not only of the total breakdown of their policies for industry, trade and the overseas balance; it is the direct result of the most crass surviving decision of the Selsdon period, the "Competition and Credit" White Paper of November 1971. That White Paper was the last dying kick of the hard-line, free market, devil-take-the-hindmost policy before the U-turns began. In the name of a free market for money, we have had monetary anarchy, arbitrage, sabotage and the assertion of the power of the big finance battalions against the weak, against industry and against social need.
The Government have created an asset stripper's paradise. They have fortified the already excessive power, wealth and arrogance of land and property speculators. They have created a monetary free-for-all, with no controls over borrowing, on the assertion of neither economic nor social priorities, with the provision that money rates must find their own level. In that market, the seeker after quick, easily earned uncovenanted profits, the land speculator, the property speculator, the stock market speculator and the commodity market speculator, does not care what rate of interest he pays because his gains will far outweigh the cost.
Hospital, school and welfare building is now cut by a Government who refuse to deal with the prodigal increase in inessential building. It is the family who seek a house at a mortgage rate of interest which they can afford to pay who are sent empty away. In the City the Government have not acted. Treasury and Bank have addressed mild admonitions to the banking system and to the borrowers, asking them if they would be kind enough to reduce the volume of borrowing going for land, property and financial transactions, and nobody has taken a blind bit of notice of the Chancellor or the Bank of England.
Yesterday the Lord President of the Council was on the radio rejecting controls in these matters, leaving the matter to the better nature of the speculators

and their innate willingness to sacrifice their profits to the wider considerations of the national interest. In May £1,498 million of bank advances were in the hands of property companies alone; £2,137 million went for personal loans, other than for house purchase. How much of this was for speculative investment? From February to May bank advances to manufacturing fell by £114 million in the Secretary of State's industrial sector. But in the financial sector bank advances rose by £263 million, of which property companies accounted for £174 million, and personal loans other than house purchase £96 million. So there was £270 million more for finance and personal loans and £114 million less for manufacturing industry. The homeless couple continue to press their faces against the building society window.
Those were the figures this year during stages 1 and 2. In the radio programme yesterday lunchtime, where the Lord President acted as the anchor man, we were told that these gentlemen had made £800 million last year. Can the House conceive what £800 million means, taken out of the economy in the last year of the freeze and the squeeze? A sum of £800 million is more than the total budget of the GLC. It is more than the national budget of a country the size of Austria. In the last six months, in the exact period covered by stage 2, they have taken another £280 million.
The Government, as we have repeatedly urged, should have reintroduced control of borrowing, including capital issues control and an ordered queue for new loans, such as successive Governments of both parties have operated in past years. Until they do this, and a lot more, Ministers will need to have increasing recourse to panic bank rate figures and panic application of the financial brakes. All we get is money poured into inessential and harmful activities. Added to it there is another twist this week—the inflationary scandal of unsolicited credit cards on top of what is supposed to be a tightly controlled system of credit. "Access takes the waiting out of wanting"—and adds it to inflation.
The further call for special deposits—the credit squeeze, as the Chancellor himself called it last week—will not, of course, affect the rate of growth, they tell


us. Oh, no. This is not, we are told, a new stop phase in stop-go. How do they know, in a free-for-all monetary market? Even with some semblance of controls, these matters are not susceptible to the delicate touch on steering wheel or brake.
The Chancellor does not know. He cannot know. He has proved it. Even in the more ordered monetary system of 1970–71—the severe credit squeeze that he then introduced with bank rate at less than half today's rate—he was sure that this was not going to affect growth, production or employment. Within a year it produced 1 million unemployed.
I do not believe that that will happen this time, largely because the Government are printing money like a banana State, but the right hon. Gentleman has no warrant for saying that it will not affect growth. When he says that—and we hear it every day from the Prime Minister—it is like a worn-out old phonograph still grinding out the same message until it finally runs down.
A sustained growth rate needs more than incantations by Treasury witch doctors. The growth that we have, such as it is, distorted as it is between what is essential and neglected, on the one hand, and what is inessential and fostered, like office building, on the other, was not even assured before the events of last Tuesday.
The Government's figures are unreliable, we know. It is a problem that successive Governments have had to face and have successively tried to improve. But the index of industrial production for September, the latest we have, was only 0·9 per cent. above the March figure for manufacturing industry—0·9 per cent. in six months—and only 0·6 per cent. in a half year for industry overall. The figures published last week showing GDP on an output basis for the third quarter were again only 0·8 per cent. above the first quarter. That is an increase of 0·8 per cent. again over six months. This is not 5 per cent. or anything like 3½ per cent. The Government are taking a great risk with industrial expansion, with everything that depends on expansion. They are doing this because neither the Chancellor nor, for that matter, the Prime Minister is any longer in control. This is why they seek to make the mine workers their scapegoat.
Something happened in stage 2 which must have been very uncomfortable. Every union, however reluctantly, accepted stage 2, as we urged, because it is the law. Nevertheless, prices rose faster than ever, and the Tory alibi was busted. It was not the unions after all. Now it is the wicked unions again, they hope.
I want to put this point to the Prime Minister and I hope that he will answer it. We need coal. How does he think we will get coal without miners? The danger to coal production, not in the next week or two—we all hope that today's discussions between the National Coal Board and the National Union of Mineworkers will lead to a satisfactory settlement being worked out in the near future—but in 1974–75. 1980, and beyond, lies far more in wastage of colliery manpower than in any overtime ban. [Interruption.] The number of pits closed under the Labour Government in six years, many of which were worked out and uneconomic, was exactly the same as the number of pits closed by the Conservatives in the previous six years, many of which were uneconomic and worked out.
Any pay and prices policy is meaning less if it does not provide for special action to deal with wastage and recruitment. That was a priority criterion for the National Board for Prices and Incomes in making recommendations on incomes, but that body was scrapped by the Prime Minister.
The right hon. Gentleman knows the facts. There are a quarter of a million miners and we are losing 30,000 a year. The coal find in Yorkshire—there are other finds to be developed—is as valuable an asset to this country as even the most spectacular finds in the North Sea. That coal will remain undisturbed beneath the ground and unworked if the miners are not there.
If the miners are as highly paid as the Prime Minister argues—miners in my constituency certainly are not—why are 600 men a week leaving to go to other industries?

Mr. F. A. Burden: What did they get under the Labour Government?

Mr. Wilson: Miners are leaving to go to other industries. Yet the Prime


Minister thinks they are paid enough. Why are they leaving to go to other industries? I will tell him. In part it is because of the conditions of mining work. This is the year of Markham, of Lofthouse, and of disasters in Scotland and South Wales. Last week the House heard the moving account given by my hon. Friend the Member for Chesterfield (Mr. Varley), whose constituency includes Markham. He told us of the ghastly nature of the injuries, the disaster, and the scars that it left behind even on those who escaped.
But the loss of manpower in the industry is also the direct result of the pay code. The National Coal Board, as a public authority, has to abide by every twist and turn of the Prime Minister's pay controls.
The right hon. Gentleman knows that hundreds of employers today are getting labour from coal mining and other essential industries and services, except in areas of high unemployment, by ignoring the pay code and paying over the odds because it suits them to do so and helps their profits. In the national interest, therefore, the right hon. Gentleman should concentrate his mind on stopping the 30,000 drift from the mines and getting a 30,000 influx into the mines.
There is another issue. One can ask for restraint if one has a policy and can offer a system of society which is fair. One can ask for an all-out national effort, common sacrifices, fairly shared, and a dedication to the national interest, if it is one nation.
Miners in their often remote communities are mature people. They have read about Lonrho, for example, and worked out—[Interruption.] I am talking about serious issues and serious people who have worked out that they must work 65 years underground or 73 years in mucky work on the surface to qualify for the £130,000 quoted in that case, and they would have to pay tax and other deductions on every penny because they get their pay at the colliery office, not in a Caribbean tax haven.
Moreover, stage 3 is aimed—[Interruption.] I am trying to explain how I understand stage 3. I think that what the Prime Minister is trying to say about stage 3, in however distorted a way, is: "This is

the national cake, and this is how it must be shared." I think that is what the Government are saying in stage 3. But miners know, as we all know, that an undue portion is cut from the cake for people who contribute nothing to the nation's health or welfare. Hundreds of millions of pounds are cut from the cake before there is any attempt to share out the remainder among the productive section of the community. Miners know all about the pre-emption in favour of the speculators in land, property, and share-pushing, the asset strippers, the tax avoiders, and the rest, by whom our national society is infested.
On Friday I asked how many land speculators are killed at their work and how many property speculators have to leave employment because of black lung until the life is choked out of them. These are the matters about which right hon. and hon. Gentlemen opposite should be thinking.
Would there be a state of emergency today if all the speculators and asset strippers and the tax avoidance profession went on an overtime ban? It is because others, much more important to the country and much more neglected relatively in their rewards, are on one.
I do not suppose many miners have received this brochure. It is called "Directors Leasing". The front page promises
Maximum tax relief for company cars, luxury yachts, executive jet aircraft.
Here is a nice one:
Luxury power yacht, 55 knots, depending on engine, reclining seats, toilet and shower.
This will come in handy on the Manchester Ship Canal for my local miners.

Mr. Burden: How many miners have yachts like that?

Mr. Wilson: If the hon. Gentleman can show me one miner who can benefit from this, I shall be glad to meet him. I am trying to explain to the hon. Gentleman the kind of society in which we live. I will send him a copy of this brochure if he would like it. [Interruption.] Is the Lord President saying that I cannot get away with this?

The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): Yes.

Mr. Wilson: This is part of our society for which the Government are responsible.
The middle pages set out for each car the monthly leasing payments and the tax relief: up to £353 a month tax handout by the Chancellor for a Rolls-Royce Silver Shadow, but a tax relief of only £176 a month for the miner who cannot afford anything beyond a Ferrari Daytona. The fourth page has some pictures and specifications of some of the more glamorous models. I should like to take this cheaper one:
Ferrari Dino. The ultimate fun car.
It looks it. I cannot quite see what company purpose it may serve, at any rate within the normal company's articles of association.
Mid-engined V6, top speed 151 miles per hour … 2-seater coupe, open or closed.
For what national purpose should the Chancellor be handing out money for that? That is the question that I put to the right hon. Gentleman. I understand that this advertisement has been checked with the tax authorities. In this advertisement the tax relief on the car that I have just described is £2,664. That is what the Chancellor is handing out to one company director, presumably.
That sum is about two years' take-home pay, after tax and deductions, of miners in my constituency who work at Cronton Colliery. I invite the Prime Minister to square that with the sort of speeches that he has been intoning in stage 1, stage 2 and stage 3. I ask the Chancellor to deny that these tax avoidance facilities are available. If he cannot deny that they are available, let him defend them before he talks to decent people in this country about a fair economy.

Mr. Peter Hordern: Will the right hon. Gentleman say whether these allowances were in existence under his administration?

Mr. Wilson: I have checked this, and this scheme was not available at that time. [HON. MEMBERS: "Oh."] It was not. Indeed, under the present Government, the Chancellor has vastly extended every kind of facility for people of that kind. Any Government setting out on the kind of policy which the Prime Minister has set out upon have the duty to free the lot of these things. We should

certainly see that these reliefs were not available.
The debate is about inflation. It is not only about broken pledges.

The Chancellor of the Exchequer (Mr. Anthony Barber): I should like the right hon. Gentleman to tell the House whether the reliefs were available under the Labour Government.

Mr. James Wellbeloved: We had not devalued the pound by 5s.

Mr. Wilson: These reliefs, as I understand it, were not available, and they were not worked out in the way that they are now. At that time my right hon. Friend the then Chancellor was scrapping one incentive after another for people to do this kind of thing, and we were not asking for what the Government are asking now. The right hon. Gentleman cannot justify—[Interruption.]

Mr. Patrick Cormack: On a point of order, Mr. Speaker. If what the right hon. Gentleman the Leader of the Opposition is saying is incorrect, should not he be asked to withdraw it?

Mr. Speaker: There is no matter for the Chair. It is not a point of order.

Mr. Wilson: As I said, the debate is about inflation and the breakdown of the Government's policy. It is about all that that means for our competitive and economic strength. It is about what uncontrollable cost increases mean for the capital requirements of the social services.
Demonstrably the Government have failed. They began from the moment when they took office by trying to put up prices. The Chancellor called for higher prices for higher profits in September 1970—the food levies, school meals, school milk and prescription charges; the terms on which the Government accepted entry into Europe, still underpinning excessive prices; and the Housing Finance Act deliberately forcing up rents.
Because the Government had no economic policy, except an unsophisticated, illiterate doctrine about "lame ducks", they embarked on an unrestrained credit squeeze. Unemployment rose, and the Government panicked and spent money in a prodigal fashion. The Select Committee indicted them for the


fact that their distinction between continuing programmes and pump-priming expenditures had broken down, and the House had been misled about quantities and commitments.
So we had stage 1, and prices and rents rose further in the freeze. New houses rose in price by £60 in every week of stage 1, and property values created new and uncovenanted gains, hundreds of millions of pounds, for a minority. And then stage 2, and the pace of inflation quickened. Now stage 3.
I notice that the right hon. Gentleman and Ministers, last week, are trying to involve us in agreeing with him in his every U-turn, trying to get us involved in every decision that he has to take. If there is one Member of this House who is not entitled to make this suggestion, proposal or challenge, whatever it is, it is the right hon. Gentleman the Prime Minister. This is the man who led his party into 102 votes against the Labour Government's anti-inflation policy on the Bill, and on case after case after the Bill where the policy was applied and where he saw the hope of sectional advantage. For political advantage he pledged himself in the General Election to the doctors' 30 per cent. claim. It turned out to be the first pledge that he broke on taking office, the first of a very long line.
The man who now demands blind obedience to his will by every trade union, every employer and every Member in every part of the House in 1966 sent a blatant public appeal to the TUC, on the very eve of Congress, demanding that it reversed the Labour Government's anti-inflation policy for pay and prices, already the law of the land.
Did the right hon. Gentleman say then, as we have said—and many of my hon. Friends have disagreed when others have said it—that the law, once enacted, must be obeyed? He did not. The right hon. Gentleman's message to the TUC was a call to the TUC to
knock some sense into Government by making the freeze voluntary.
That was his record as Leader of the Opposition. The TUC treated his demand with the contempt that it deserved.
We have told the right hon. Gentleman the conditions in which an appeal can be

made, which, deserving success, can achieve success. It means directly attacking the main components in the household budget of an ordinary family—food prices, housing, repeal of the Housing Finance Acts, direct action on mortgage interest rates. We have set out our policy on this in full detail. It means introducing controls over borrowing based on national priorities—economic and social priorities. It means repealing the class-biased cuts on the taxation of the rich which came into force during the freeze. It means setting up a national housing corporation to ensure that the funds are there to finance local authority house building and owner-occupier house building to the full extent of the Government's housing programme, based on the resources available, human and material. It means the enactment now of a penal, near 100 per cent., tax on the profits from land and property speculation until all land required for urban development and redevelopment is taken into public ownership at or near existing use values.
It means clawing back for public use the inordinate unearned profits which the banks are securing as a result of Government action on interest rates. It means cutting inessential Government expenditure. It means that defence expenditure must be reduced to a level at which we do not incur a burden, in relation to GNP, higher than that of our NATO partners in Europe, or higher than that of other members of the EEC. It means renegotiating the terms of European entry so that, at worst, Britain's relative burden is no higher than that of Germany or any other EEC member State. It means cutting out Maplin. That will not help this year, but commitments made one year cause the inflation of succeeding years. It means also cutting out at least the present version of the Channel Tunnel project.
It means attacking the juggernaut problem, both here and in relation to Europe. Uninhibited freedom to introduce juggernauts on to our roads, regardless of size or numbers, simply means an automatic and uncontrollable commitment, forced on any Government, whoever they are, to build new motorways and the still more costly urban access roads on a scale that we simply cannot afford and must reject for the future.
But, in a wider sense, it means creating a fairer system of society, where the


heaviest burdens are borne by the broadest backs, where no one profits out of society, and where those contributing most to our wealth and welfare and to our national strength and independence are accorded the status and economic rewards of first-class citizens.
Yesterday the Leader of the House, in the broadcast to which I have referred, spoke in terms of another 18 months before the General Election. The country cannot afford another 18 months of the present Government. The Government have no policy remotely relevant to deal with the crisis that they have created. The last remaining relevant, constructive step open to them now is to confess their failure and get out.

4.30 p.m.

The Prime Minister (Mr. Edward Heath): The real question facing the House and the country today is whether the expansion of the British economy will be continued, and in what form.
Whatever challenge may be made to the Government benches it has already become perfectly plain that the challenge will not be that of a viable alternative policy. Seldom have I, or anyone else, seen such unanimity among columnists, economists and leader writers that the Leader of the Opposition has nothing whatever to offer which is relevant to the problems which face the economy today in respect of expansion. His speech today has clearly shown, as has the reception on his own benches while he was making it, that those few suggestions hurriedly slung together at the end of his speech do nothing except to deny the modernisation of Britain and the British economy.
The proposals of the Leader of the Liberal Party, which he made yesterday, and which he may repeat today—just as the Leader of the Opposition has today repeated last Friday's speech—showed no major attempt to deal with the problems of expansion. To deny Maplin £7 million for the coming year will not deal with the problems of Government expenditure. All it will do is to mortgage an important part of the future, if we are to have a modern Britain.
No one would agree more than I with the Leader of the Liberal Party that class warfare should be avoided. He calls for worker participation. Those who repre-

sent the workers, the TUC, and the employers, the CBI, have had far greater opportunity to participate in every aspect of the management of the economy under this Government than under any previous Government. The whole House knows that to be true.
What the nation has asked for from today's debate is a balance sheet on expansion, and I propose to deal with it. What the Press is demanding is plain speaking about the problems facing us at a time of expansion, and I also propose to deal with that.
In the post-war years the nation has failed to bring about a steady and continuous expansion of the economy. We have fallen behind other countries in our standard of living and in social progress. Both can be remedied only by the creation of a modern, expanding economy—an economy which is in balance. I cannot accept the arguments of those who wish to see our social grievances remedied and our quality of life improved, but are not prepared to devote the necessary thought and energy to the expansion of the economy.
The Government embarked deliberately on a policy of expansion, knowing full well the internal problems that would be encountered on the way. British industry suffers from a lack of capacity to respond to expansion at home and overseas. Many industries lack modern plant and machinery. Industry also lacks a labour force which is properly balanced in skills and in areas. Industry has lacked the resources to create capacity because of low profitability during past periods of stagnation. The machine tool industry has lacked the capacity to meet the requirements of national expansion when it comes.
The trade union movement, as it readily admits, has not yet organised itself to deal effectively with industrial disturbances to prevent loss of production, nor with the rationalisation of the wages system which so many in the movement believe to be urgently necessary. It is not yet able effectively to deal with that without encouraging the forces of inflation. These are the problems which face us as a nation internally in continuing expansion.
As a result of failure to sustain expansion in the past, management has lacked confidence in creating new capacity. It


has lacked confidence in the security of expansion and its ability to continue in the future. These are the problems which face us as a country today in continuing expansion, an expansion to which both trade unions and employers have consistently pledged themselves, and still do.
Added to these problems is the national desire, quite rightly, to replace our older social capital, to rebuild city centres, to replace old schools and hospitals, to tear down slums, as well as improve the existing stock of housing and build new houses. We recognised these internal problems. We also fully recognised the desire of local Labour authorities to rebuild town centres, and to have development companies to do it, unlike the Leader of the Opposition.
We have also recognised the time it takes to adjust to these problems. It is far less than is normally available to us or to a country, far less than many people would like.
But these adjustments can be easier when the nation can see that expansion is not only coming about but will continue, when it can see that jobs are available and that change is worth while. At the same time, the nation as individuals expects to be able to share in the expansion which it sees about it. Indeed, many will try to make up for the backlog of the years of stagnation, some to regain a lost advantage, some to establish a parity which they did not have before. These pressures are increased if the nation fears that expansion will not continue and that another stop will arrive, as it did in the past. It is only by convincing them that steady expansion can be continued that there will be a steady and orderly response to such pressures.
In pursuing expansion, we recognise also the external problems, the need to re-equip British industry, which must be done substantially from overseas, the need to restock, both in raw materials and fuel. We could not foresee—no Government could foresee—the drastic increase in oil prices so suddenly imposed by the producing countries, any more than any Government in the Western world could foresee the rapid rise in world prices of food and raw materials, or could prevent those rises from coming about.
These are the two major external problems with which we have to deal—the provision of resources for expansion and the rapidly increased costs of the resources for expansion. We have to meet them before the fruits of expansion can be harvested in our exports.
There is one general point in the management of such an economy which is of immense significance. When an economy is well balanced, it can no doubt be managed successfully with generalised measures which operate overall, such as we see in the German economy and which some in this House are prepared to urge. When an economy is seeking to establish a new balance in so many different fields, as the British economy has to do, more selective measures undoubtedly must be taken while it is getting into balance. Such is the justification for the regional policy to which we have always been pledged and which we have carried through.

Mr. Ray Carter: Will the Prime Minister give way?

The Prime Minister: No. I wish to continue this part of my speech.
Throughout expansion, sufficient pressure must be kept on the economy to persuade management and unions to adopt new techniques, to make better use of existing capacity and existing manpower, whilst expanding it wherever possible, but without at the same time putting so much pressure on the economy that it becomes overstrained.
I hope that no hon. Member will think that the management of such an economy can be carried through by some single, simple, automatic process.

Mr. Dennis Skinner: On a point of order, Mr. Deputy Speaker. Is it in order for more than 50 per cent. of the members of the Government present to be asleep at the same time?

Mr. Deputy Speaker (Sir Robert Grant-Ferris): The hon. Gentleman knows perfectly well that that is not a point of order.

The Prime Minister: The hon. Gentleman also knows perfectly well that it is not true. Having failed to shout me down, he now wishes to mislead the public.
It is a fact of our economy that it will require constant and continuous adjustment, as when my right hon. Friend the Chancellor of the Exchequer reduced Government expenditure earlier this year, as when special deposits are called for or released, as when the construction industry was given relief last October until the end of this year in order to catch up with its programme.
Against that background, let us look at the balance sheet of expansion, looking at employment first. In 1970 unemployment was over 600,000 and still rising. It is now substantially lower, at 500,000, and falling. It is characteristic of the German economy that whereas we are at a figure of 2·2 per cent., which some are already criticising as too low, the German economy has been able to run for two decades on a figure of 1 per cent. or less. Expansion has provided jobs, which both employers and trade unions want.
Secondly, let us look at production and productivity. In 1970 demand and output were stagnant, domestic costs were rising steeply, and capacity was under-used. Now industrial production is up by nearly 10 per cent. on a year ago, output per head is up by 8½ per cent., and production is still rising fast. In September, engineering production had risen by 17·3 per cent. compared with a year ago, chemicals by 14 per cent., and a strong growth has been reported in the production of capital goods. By mid-summer, net new orders in the engineering industries were 30 per cent. higher than a year ago, and sales were 17½ per cent. higher.
The problems now—[Interruption.]—The nation will watch the reaction of Labour Members to the decrease in unemployment and the increase in production.
The problem now is to find ways to increase output from existing capacity in every way possible, through equipment or manpower.
Thirdly, I come to the development of regional policy, which can operate only against a background of expansion. Last year's Industry Act represents the most comprehensive set of measures to tackle the regional problem that any Government have introduced. A total of 550 offers of selective financial assistance

have been made for projects estimated to create 42,000 new jobs in the regions. The development grants and tax allowances for capital investment have led to the improvement of investment which the right hon. Gentleman mentioned. This policy is bringing about the regeneration of the regions, reduced regional unemployment, and a better balance in the economy as a whole.
Twice as much is being done this year in training and re-training as a year ago, and it will increase steadily and rapidly. We are considering ways in which a massive speed-up of training can be made in particular industries where the need is greatest, such as the construction industry.

Mr. Michael Meacher: Will the Prime Minister give way?

The Prime Minister: I am sorry. I am giving a balance sheet, and I want to finish.
I come to investment. The Leader of the Opposition knows full well that in the first half of this year manufacturing investment was 7 per cent. higher than in the preceding half year, but he tends to discount the announced intentions of firms to make investment.

Mr. Harold Wilson: I do not.

The Prime Minister: I am glad to hear that the right hon. Gentleman accepts them, because the latest survey of investment by the Department of Trade and Industry points to 1974 as the highest growth year for investment for more than 10 years. Let the right hon. Gentleman accept that the highest growth year of investment for more than a decade is the result of the expansionist policy of the present Government.

Mr. Denis Healey: rose—

The Prime Minister: No.
Nor do I believe that the interest rates brought about by the action last Tuesday, which were essential in these circumstances, will discourage the long-term investment plans of industries, because they have made their commitments and they are taking the view that in the long term the investment will be fully justified. They will carry on with their plans, and one of the characteristics of British companies today is that many of them are


liquid and in a perfectly healthy state to carry through their investments.

Mr. Healey: Is the right hon. Gentleman aware that in 1971 actual investment was 8 per cent. below the figure reported to the Department of Trade and industry as the level of investment intensions, and that in 1972 the figure was 12 per cent. below that level? Even if the current statement of intentions is true, investment will still be below the level of 1970.

The Prime Minister: I am well aware of those figures, but I am aware, too, of the fact—which the right hon. Gentleman the Leader of the Opposition has accepted—that investment intentions for 1974 are the highest for more than 10 years, and it is with the future that I am dealing.
I now propose to refer to inflation. The right hon. Gentleman the Leader of the Opposition has never been prepared to admit the movement of world prices, but he must accept what the Economist says this week, that, subtracting the effect of higher import costs on inflation, for which no Government can be responsible, Britain comes out with the slowest home-produced inflation. That is the achievement of this nation, and I do not see why the Economist should be denied.

Mr. Healey: rose—

The Prime Minister: No.

Mr. Healey: rose—

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. If the Prime Minister does not give way, the right hon. Member for Leeds, East (Mr. Healey) must resume his seat.

The Prime Minister: The right hon. Gentleman will have an opportunity later to make his speech, and he may do so then.
I come to what has been happening to the standard of living over the past period of expansion. It increased by nearly 6 per cent. in 1972, faster than in any of the previous 20 years. That is now firmly established, and it was carried through into 1973. The improvement in the first half of 1973 over the second half of 1972, allowing for taxes, for the rise in prices and for the rise in population, was 3¼

per cent. That was a substantial rise in the personal standard of living, and far greater than at any time during the six years of the Labour Government.

Mr. Gavin Strang: rose—

The Prime Minister: I cannot keep on giving way, because I am going to make my speech in my own way.

Mr. Harold Wilson: rose—

The Prime Minister: No.

Hon. Members: Give way.

The Prime Minister: The right hon. Gentleman—[Interruption.]—has already made his speech, and he was given—[Interruption.]

Mr. Deputy Speaker: Order. I think the House must realise that when the right hon. Gentleman gives way he does so, and when he does not, he does not do so, and the House cannot interfere with that. There can be no question of any undue pressure being put upon anybody.

The Prime Minister: I have given way frequently, and the right hon. Gentleman the Leader of the Opposition did not give way during his speech. However, I now give way to the right hon. Gentleman.

Mr. Wilson: I am grateful to the right hon. Gentleman for giving way. I should not have asked him to do so had he not referred to me. He said that no Government could be responsible for import prices, yet in "A Better Tomorrow" he said:
The main causes of rising prices are Labour's damaging policies of high taxation and devaluation.
If a 14 per cent. devaluation had the effect of raising prices under the Labour Government, how can the right hon. Gentleman say that a 17 per cent. devaluation by his Government has not been responsible for raising prices?

The Prime Minister: Had the right hon. Gentleman been listening, he would have realised that I was referring specifically to world prices. I was not referring to the impact of what is now slightly more than a 17 per cent. depreciation of sterling. Perhaps the right hon. Gentleman will address his mind to that, too.
I now propose to deal with the balance sheet and the enormous impact of world prices on fuel and raw material prices in this country. The right hon. Gentleman had better challenge the statement by the Economist that this country has produced a slower growth of domestic inflation than any other country. That is the success of phases 1 and 2 of the Prices and Incomes Policy.
I wish also, in the balance sheet, to deal with the question of finance, the borrowing requirement and increased bank lending. The increased bank lending was reflected in the money supply figures. It was too high, and the Chancellor took action to deal with that by calling for increased special deposits. The amount of credit was too large, and it had to be reduced without damaging production. As far as public spending is concerned, the nation will realise that, under the Chancellor's plans, from 1974 onwards the increase in public expenditure will be considerably less than the increase in expansion and growth.
I now want to deal with exports because, for the first time in the post-war period, the United Kingdom volume of exports has risen faster than the volume of world trade. In the first half of this year, the growth in volume was 24 per cent. at an annual rate, compared with the world growth of 17 per cent. to 19 per cent. In the last quarter, our total exports were 34 per cent. higher at an annual rate than in the second half of 1972.
In the engineering industries, the latest available figures show that net new orders for exports in the three months to July were 41 per cent. higher than a year ago, net new orders at home were 24 per cent. up, domestic sales were up by 13 per cent., and export orders were up by 29 per cent. The engineering industries should have credit for what they are achieving today.
I now turn to the question—[HON. MEMBERS: "Oh."]—I know how distasteful all this is to hon. Gentlemen opposite, but I now propose to deal with imports, because the nation ought to recognise that in the last three months our imports of industrial materials amounted to £594 million more than in the corresponding three months last year, while imports of fuel amounted to £183 million more. The total increase, including machinery, was

£981 million, in which devaluation played the smaller part.
This is an increase far greater than our deficit, an increase three times greater than the increase that has taken place in our deficit since the same period of last year. If a proper judgment is to be made about continuing expansion in this country, it must be recognised that the machinery has gone for re-equipment, that the industrial raw materials have gone for our expansion and that the fuel has gone for the same purpose, together with stocks, which, in the present world situation, are of immense value to us.
Those, then, are the aspects of exports and imports that are important to the nation at the moment. As the problem has arisen because of this growth in the imports of machinery and fuel and raw materials, where is the present position different from previous attempts to break through stop-go, previous attempts which failed? It is different in two vital respects which the nation ought to recognise.
First, it is different in that our exports now are competitive throughout the world and they are much more profitable to industry than are home sales.

Mr. Harold Wilson: That is a difference?

The Prime Minister: The difference—and I understand why the right hon. Gentleman is so sour—is that by his devaluation the right hon. Gentleman did not bring about this situation; that is where the difference is today.

Mr. James Callaghan: What was brought about as a result of the devaluation of 1967 was the largest balance of payments surplus that the country has ever seen. What the right hon. Gentleman has brought about by his expansion is the largest deficit this country has ever seen.

The Prime Minister: What the right hon. Gentleman, and mainly his successor, brought about was the complete stagnation of the economy and a massive increase in unemployment. At the end of his time, the right hon. Gentleman said, perfectly fairly, that the balance of payments ought to be used, first, for going into the European Community and, secondly, for bringing about an expansion of the economy. That is precisely what


we have done. I wish the House to recognise these important differences from previous occasions, because it is important that the nation, too, should recognise them.
Not only are our exports competitive worldwide in every sphere, but the markets are there for them and the inducements are there to businesses to sell them.

Mr. Carter: We cannot produce them.

The Prime Minister: The hon. Gentleman says that we cannot produce them. He comes from an area that has lost 400,000 cars in the course of this year. If those 400,000 cars had been produced, that would have been £400 million.

Mr. Carter: Is the Prime Minister aware that the production that the car industry loses annually because of strikes is insignificant compared with the fact that it simply cannot produce enough cars to stop the British market from sucking in imports? What the British car industry needs is an immense amount of investment, and that is what the present Government have not produced.

The Prime Minister: It is an extremely illogical argument to ignore 400,000 cars that would have saved £400 million of imports or increased exports. It does not seem logical to say that because we could do with still greater capacity, it does not matter if we waste £400 million worth of cars. The markets are there. What is required is additional production and additional capacity.
The second difference in the situation, a difference which the right hon. Gentleman recognises full well, is that the pound is not pegged and our reserves are large. That can help us in taking the strain on our balance of payments during this period of expansion.
The Leader of the Liberal Party suggested yesterday that we ought immediately to peg the pound in the European snake, that we should do so in the interests of European unity as well as in the interests of our own economy. I have to tell him that I do not believe that to be wise advice at the moment and I must tell the House that no one in the European Community is pressing

Britain in any way to peg the pound to its present position.
Having given those facts about the real situation of the expansion, I wish now to deal with the state of emergency, to which the right hon. Gentleman referred.

Mr. Callaghan: rose—

The Prime Minister: No, I am not giving way. I have already done so several times.

Mr. Callaghan: rose—

The Prime Minister: No.

Mr. Deputy Speaker: Order.

Mr. Callaghan: rose—

Mr. Deputy Speaker: Order. I am surprised at the right hon. Member for Cardiff, South-East. When I call any hon. or right hon. Gentleman to order, I expect him to obey me, wherever he comes from.

Mr. Callaghan: Of course I obey, Mr. Deputy Speaker, but if we are to have a balance sheet, all I am asking about is—

Mr. Deputy Speaker: May I know whether the Prime Minister is giving way?

The Prime Minister: I am not giving way. I shall not give way to every right hon. Gentleman who loses his temper and shouts at me.

Mr. Callaghan: What about loans?

The Prime Minister: Loans have been made to the nationalised industries and local authorities from abroad, as they have been made in the past. There is absolutely no reason why not—indeed, it shows the confidence of those overseas that they are prepared to deal with local authorities and nationalised industries and others in this country who wish to borrow in the European market and who are perfectly entitled to do so.
I wish now to deal with the state of emergency which was declared on Tuesday, and I do so because the right hon. Gentleman referred to it. It was fully justified. Two years ago, the present Government waited in a crucial fuel situation because it was always said that not to do so would further damage industrial relations. The Government have this time decided to take early action, and


they have already been proved fully justified.
The National Coal Board believes that the loss of production last week was between 20 and 22 per cent. of output and that there will be an increased loss of production this week unless the overtime ban is removed. It is perfectly true that the miners' leaders themselves warned us of this. Thus, there are sufficient grounds for taking action in order that as a nation we can conserve our fuel supplies.
At the same time, there are uncertainties about world oil supplies, despite the action which has been taken by certain Arab supplying countries to ensure that Britain should not suffer in this present situation. We took speedy action—immediate action—to husband the nation's energy resources. We shall need in future to conserve all our energy resources, probably until new sources come into use from North Sea oil, to which the highest priority is being given, from new coal pits and from nuclear energy stations. In the circumstances, we must give priority to industry to safeguard production for export in the present situation.
But the only full answer to the problem of oil supplies is a speedy peace settlement in the Middle East, for which we are working. I cannot emphasise too strongly that the only permanent answer to the problem of oil supplies is a speedy and permanent peace settlement in the Middle East.
The price of oil is a burden on our economy and on all Western economies. I must say that by this policy the Arab countries run risks of damaging, indeed of heavily damaging, their friends in Europe. It is bound to make it more difficult for Europe, for the Community and for others, to find resources to help the rest of the developing world. Moreover, I hope that the Arab countries will realise that it is not only the industrialised countries that carry the burden of this drastic and rapid rise in prices; it is also the rest of the developing countries themselves that have to carry part of that burden. It can of course be offset by purchases by the Arab countries for their development and that of others. It can be offset by maintaining balances in the Western European countries or the Western countries generally. But it must

mean that we shall have to use a larger proportion of our national resources, a greater part of our wealth, to pay for the fuel we require until our own resources are sufficient to meet those needs.
I hope, therefore, that the nation will realise this—and in this context I must refer to the miners dispute. I believe that Parliament having established the prices and incomes legislation and the code, all arrangements in future must be within stage 3. This is for negotiation between the miners and the National Coal Board and I hope that it will be possible for them rapidly to reach agreement. I believe that the offer which has been made to the miners is very generous. Under it they will do better than most other groups under stage 3. This means that the offer will improve their relative pay position—

Mr. Skinner: Not for all of them.

The Prime Minister: —which is something for which they have been asking. I must tell the hon. Member for Bolsover (Mr. Skinner) that it is possible within a total sum to negotiate arrangements for individual miners to ensure that, but this is a matter for the NCB and the National Union of Mineworkers.

Mr. Skinner: rose—

The Prime Minister: If the hon. Member will allow me to finish this part of my speech I will give way to him.
The code will ensure for miners and others that any improvement they have over other groups is not lost by automatic leapfrogging as has happened in the past. The Leader of the Opposition asked about the supply of manpower. No solution is found to that problem by allowing leapfrogging to take place. Under his administration manpower in the pits was drastic ally run down but we have endeavoured to stabilise the industry. It lost 50 million tons a year under the last administration and we are stabilising it at its present level and wish to encourage its expansion in new pits.
But it is interesting, is it not, in considering why miners are leaving the pits—and one can understand that many might wish to leave an underground occupation—that the great increase in numbers leaving came after industrial action was announced? It is the case that many in


the coal mining industry do not wish to lose overtime wages and do not wish to lose a large amount of their pay as they did two years ago. I believe that the present situation is a clear indication of that.
The miners have been offered a threshold of 7 per cent. and an increase of 13 per cent. They have also been offered an efficiency agreement, which would have to be self-supporting with increased production, covering increased wages which could amount to 3½ per cent. Leaving aside the efficiency agreement, which is for negotiation but can come into effect on 1st January, the offer of 13 per cent. with a threshold of 7 per cent. means that they have a clear and firm guarantee throughout the coming year of a real improvement in their standard of living of 6 per cent. In the past we have experienced a rate of growth of 5 per cent. We have been urged by those with whom we have been having discussions that we should keep growth as high as possible, but until the additional investment comes through it will be slightly below 5 per cent. The miners therefore are being offered a clear and firm guarantee of a real improvement in their standard of living—

Mr. William Hamilton: No.

The Prime Minister: —greater than the growth of the economy during the coming year. There are those who will criticise stage 3 and the Government for the way they introduced it, saying that it is not justified by the rate of growth of the economy. It is justifiable only because it is recognised that some of those entitled to the full benefits of stage 3 will not be able to achieve them. But it means for the miners that with a 7 per cent. threshold they have a clear guarantee for this year whatever may happen to prices, of a real improvement in their standard of living.

Mr. Skinner: Only 14,000 miners out of a total of about a quarter of a million actually work night shifts regularly. That is the number who will qualify under the unsocial hours provision. The miners cannot stomach that a private contractor such as the Cementation Company is inviting miners on a recruitment basis to be paid £15 a day to work alongside

NUM-organised miners on less than half that amount. Will the Prime Minister say why men who are working a few feet underground in the Strand can get £150 a week whilst Northumberland miners, working five miles out under the North Sea, get less than £40 a week?

The Prime Minister: If the code is being broken the hon. Member has only to refer the case to the Pay Board. The hon. Member is complaining that an aspect of the code has been broken and he confirms that this is the case. All he has to do is to report that case to the Pay Board for action to be taken.

Mr. Eric S. Heffer: rose—

The Prime Minister: I shall not give way.

Mr. Heffer: It is self-employment. It is lump labour.

The Prime Minister: The TUC proposals on lump labour in the construction industry are being generally examined with the employers.
There is nothing unfair about what is being offered to the miners under stage 3. What is quite clear is that, first, stage 3 must be maintained if we are to keep control over the domestic aspects of inflation. Secondly, the choice for the unions—not only the miners—and for employers still remains steady expansion with an orderely increase in wages and incomes or a return to deflation, stagnation and unemployment. That is the hard choice. The new General Secretary of the TUC said on 15th November:
The TUC deprecates talk about panic or disasters … these are problems but we don't think that it amounts to anything like panic. In the long term it is still true that the solution to our problems lies in economic growth. It lies in continuing expansion, and it lies in continuing investment.
With that I fully agree. So what is at stake is to maintain expansion and to achieve investment and to do it through the orderly methods of stage 3.
I say this to the nation: we have achieved expansion and we have the opportunity to continue with steady expansion provided we seize every opportunity of increasing production, that we abandon old techniques of management, that we abandon the go slow or the


banning of overtime as a means of supporting disputes and that we supply the export orders now on our books. Other countries have far greater problems than we have—

Mr. James Wellbeloved: No they have not. They have not got you.

The Prime Minister: They similarly have been hit by world prices. They have higher rates of inflation than we have. They are suffering even greater damage than we are from the oil situation. They are not considering reducing their policies of steady expansion, and nor should we. Let us seize these opportunities and break through the cycle of stop-go which has bedevilled and debilitated us for so long. Let this House set an example to the nation tonight by rejecting this motion of censure.

5.14 p.m.

Mr. Jeremy Thorpe: When listening to the Prime Minister's progress report to the nation it was difficult to remember that we were listening to the speech of a Prime Minister who has failed in almost every economic objective which he set himself in 1970. There is hardly an economic objective which the Prime Minister has achieved.
If the truth hurts the Prime Minister he is, of course, entitled to leave at a stroke. It is hardly surprising that he has in consequence lost four by-elections in the last 12 months. His only consolation is that the Labour Party is not believed or known to have a more credible alternative. Indeed, it is in trouble with the right hon. Gentleman the Leader of the House. The right hon. Gentleman went to Hove and castigated the Labour Opposition because they were not trying hard enough in Berwick and Hove. No doubt he wanted to see more activity from the Labour Party so that the non-Tory vote might be more effectively split.
Nobody can accuse the Government of not knowing what they wanted to achieve when they came into office. They had a classic and doctrinaire belief in free enterprise which John Maynard Keynes buried years before the outbreak of the Second World War. There was to be no State intervention to help ailing industries. That was promptly reversed by Rolls-Royce and Upper Clyde. The Tory Front

Bench became a sort of collective Wedgwood Benn. They said that there was no need for a statutory prices and incomes policy. That was logical because, as the present Leader of the Opposition said, they voted against every attempt by the Labour Party to introduce any statutory instrument to give effect to such a policy.
It was believed by the Government that free play of the market was sufficient. It was only after a series of unsuccessful confrontations, which almost always led to capitulation by the Government, that we had phase 1, phase 2 and now phase 3, which has in it an inbuilt rate of inflation of nearly 15 per cent. Indeed, the debate takes place against a back-cloth of economic failure. It has taken the Government three years to prove to them selves that their policies are wrong—[Interruption.] If the hon. and gallant Member for Eye (Sir H. Harrison) is satisfied, it will be interesting to see what the electors at Eye say.

Colonel Sir Harwood Harrison: They are satisfied now, as the right hon. Gentleman will see.

Mr. Thorpe: The hon. and gallant Gentleman does not speak for the party which I represent, which has won more by-elections than any other party this year and which has polled more votes. He will do well to remember that.
The three major faults of the Government are that they have shown little or no feeling for human psychology, that they have little economic tact and that they have a total lack of economic priorities. The Prime Minister, in blaming those he alleges are responsible for the present situation, does not go as far as the present Leader of the Opposition. The Prime Minister does not talk about the economy being blown off course by politically motivated wreckers. He does not use such strong language. But we are told that it has been a combination of industrial disputes and climatic conditions which have affected world prices. Never at any stage is there any suggestion that the Government are in any way to blame.
The fact remains that the Government have failed to produce an economic policy which is seen by the nation to be fair and which commands the nation's support. If they were able to achieve such a policy I


believe that the economy could be righted. All that we have is a competition between the right hon. Gentleman the Chancellor of the Exchequer and the right hon. Gentleman the Secretary of State for Trade and Industry in showing their super-optimism as disaster follows disaster.
We have the worst visible monthly deficit for 20 years. Even then the computer choked and left out £75 million from the total. The money supply has increased this year by over 25 per cent. compared with the previous year. Lending rates have gone through the roof and confidence is at a low ebb, not least on the right hon. Gentleman's back benches. Despite the fact that we floated our currency, which I believe was a totally right decision to have taken—it was expected that our currency would probably depreciate by 5 per cent. in sympathy with the dollar—sterling has slipped disastrously at an annual rate of 10 per cent. whilst the value of the yen, the guilder and the deutsche mark have appreciated substantially in value.
The comparative figures show that our currency has depreciated by 17 per cent. against the yen, 25 per cent. against the guilder and 27 per cent. against the mark. Depreciation of the value of our currency adds between £2,000 million and £3,000 million to our import bill. The Government are directly responsible for the depreciation of our currency. That has been coupled with the adverse balance of trade which has produced the present deficit.
The irony is that if the purchasing value of the pound in Europe is compared with its purchasing power in Britain, it will be seen that its purchasing power in Europe compares favourably with that in this country. To that extent, we can see that in many cases the pound is undervalued. However, in the minds of foreigners it is a risky currency and we have seen an annual depreciation and a swingeing bank rate.
The floating of our currency was designed to stimulate exports and to get higher levels of profit by increasing the sterling price which, with the depreciated currency, could be absorbed in foreign markets. Many of our capital projects are subject to long-term contractual commitments. Further, there are in some

contracts trade agreements which have escalated import tariffs because produce is being sold abroad at a lower price than the price charged in the United Kingdom.
But having said that, the House, the Government and the nation must ask why it is that our currency continues to depreciate every year by nearly as much as 10 per cent. We must realise that raw materials are relatively cheap for those countries whose currency is appreciating in value. That is giving to the advanced industrial nations an inbuilt advantage compared with our markets from which they are benefiting greatly. The Germans, the Dutch, the Japanese and, to a lesser extent, the French are all benefiting because, whilst our currency depreciates, their currencies get relatively stronger. Therefore, their import bills are not as great as ours.
It is no good having inflationary policies if the result is that the cost of materials is pushed up by as much as £2,000 million a year. We must recognise that the value of our currency turns upon the judgment foreigners make of the way in which we run our affairs. The Prime Minister said that it was all very well to talk about Maplin but that Maplin was not an immediate capital expenditure by the Government but a declaration of priorities. In the present economic climate and crisis which we face, to declare that the Government will go ahead with the Channel Tunnel, Maplin and Concorde, coupled with the industrial confrontation which we have seen during the past three years, gives an indication of the sort of management of the economy which we can expect from the Government.
The Prime Minister may think that foreigners are hideously unfair to come to such a view. However, the fact is that they have come to an adverse view, and that is one of the reasons for our having a depreciating currency.

The Prime Minister: I am sorry that I had briefly to leave the Chamber. By the time Maplin proceeds the total gross domestic product of Britain will amount to approximately £550 billion. We shall have to use £800 million approximately for Maplin. That is the sense of proportion which foreigners observe. They note that whereas others can go ahead with new major airports without affecting


their economy or upsetting their psychology, the British are still not able to do so. In fact, we are now going to do so, but many think that we should not.

Mr. Thorpe: I hope that it was a Freudian slip when the right hon. Gentleman said that they did not think the British were able to do so. I hope that proof of such ability is not merely a virility symbol. With great respect, that seems to be the parlour maid's answer—"It is only a little one". We are indulging in three massive capital projects which indicate this country's scale of priorities. We are doing so at a time when the infrastructure of our regions is decaying, when we have an appalling housing problem and out-of-date schools and hospitals. Those are far higher social priorities than the three prestige projects to which we are committed.
The Prime Minister is entitled to say that that is not the reason why people are critical of the management of our economy, but the fact remains that our currency has depreciated since floating because that is the judgment which foreign investors, rightly or wrongly, pass on the way we handle our affairs.
I come now to the question of prices and incomes. I have always believed that a prices and incomes policy was necessary—if need be, a statutory prices and incomes policy—and that, very often, it was desirable. That is why my hon. Friends and I voted for the attempt made by the right hon. Lady the Member for Blackburn (Mrs. Castle) when she introduced her White Paper. We made clear—she was courteous enough to say so—that there were points on which we were concerned and which we wanted to see amended, but we supported the policy in principle. That was not the support which the right hon. Lady received from the Conservative benches. Then, when the roles were reversed and after three years this Government also realised that a statutory prices and incomes policy was necessary, they were opposed by the official Opposition.
I believe that such a policy will succeed only if it is seen to be fair to the low paid and to the old and if there are genuine rewards for productivity. The Prime Minister says that his stage 3 has provision for rewarding the low paid.

But, surely, he will be the first to agree that that depends upon the way in which management and those who negotiate on behalf of the trade unions are prepared to see a larger slice of the cake go to the low paid rather than to those at the top of the scale. Time and again, industrial relations over the last 30 years have shown that it is not the higher paid who are left behind in the queue; it is the low paid, who have very little economic power.
At the recent Labour Party conference, the concept of minimum earnings was turned down. I believe that we shall not solve the problem of the low paid until we have statutory minimum earnings expressed as a percentage of average wages. I believe that this policy, staggered over four years, would be but a small price to pay for the Prime Minister and his Government being able to establish a prices and incomes policy which could be seen to be fair to the low paid. He would be in a far stronger position then to expect restraint further up the scale.

The Prime Minister: Many have accepted that those at the lower end of the scale should have a greater proportion than those at the higher end. For example, the Civil Service unions have done this, and, in fairness, I should add that the miners themselves, two years ago, made substantial changes in their negotiated settlement to that end. But if the right hon. Gentleman is right in believing that those in the higher-paid unions will always use their pressure, it must surely follow that if one had a minimum wage they would use their pressure to maintain their differentials. That is where the burden comes on the economy.

Mr. Thorpe: I entirely accept that, as part of the package, in return for guaranteed minimum earnings, there could not be automatic extension or maintenance of differentials. The Prime Minister asks, in effect, how I would solve that problem. But he is trying to do it by maintaining a norm. All I am saying is that he is far more likely to have success in keeping down excessive wage claims if he is seen to be looking after the low paid who are left behind—the farm workers, many public servants one can think of, and so on.
I speak now as one who has from this bench supported the attempts of both Governments to achieve a statutory prices and incomes policy. One is entitled to say that such a policy will succeed only if it is thought to be fair, and it cannot be thought fair, in my view, unless something is done specifically for the low paid through the introduction of minimum earnings. It has been done in Holland and in one or two other countries, and there is no reason why it should not be done here. If that is done—if, for example, pensions, both retirement and disability pensions, are pegged to a fixed percentage of average industrial earnings—any Government will have the moral authority to expect a measure of restraint as part of their prices and incomes policy, provided that they move to the next stage and do something about prices.
Of course, it would be expensive, but the achievement of a prices and incomes policy which is seen by the nation to be fair could be one of the greatest successes for any British Government, and I do not believe that in-built guarantees for the old and for the low paid would be a very high price to pay, for they are socially necessary as well.
Now, the question of prices. In my view, the Price Commission is now a complete push-over. I am sick and tired of seeing prices allowed to go up on a cost-plus basis redolent of the years of the Second World War. Industrialists should be told that they must absorb far more of their costs and overheads through higher efficiency. Very often, in the determination of any particular application, there ought to be a comparison with costs in other countries for the relevant product, allowing for energy and labour costs and for raw materials.
If we had a prices and incomes policy which was seen to be fair, those who breached the norm in the case of prices could have to meet a surcharge on corporation tax, and in the case of excessive wage increases there could be a surcharge on the national insurance contribution.
Unless the Government can produce a prices and incomes policy which is seen to be fair, they will never control inflation. No Government will be able to control inflation if they do not do that.

Sir Harmar Nicholls: Surely, the right hon. Gentleman is not

suggesting that the Pay Board is being deliberately unfair. It is doing its utmost to take all circumstances into account, quite apart from considerations of cost-plus. The right hon. Gentleman is not helping at a time of great difficulty by giving the impression that he believes that an impartial objective body is being deliberately unfair.

Mr. Thorpe: The hon. Gentleman must have misheard me. I have just been referring to the Price Commission and the way in which almost automatic awards are given on a cost-plus basis. I did not refer to the Pay Board, though I did refer to our experience of industrial relations, which shows that it is always the poorest and the lowest paid who are left behind. If I may say so, if the trade unions showed as much care for the low paid as they do for the higher paid, many of the problems of the 5½ million lowest paid who get less than two-thirds of average industrial earnings might be eased and they could be far better off today.
We may well have to look at import quotas. An enormous number of quite unnecessary luxury goods come into this country. I am sure that this country could survive without Californian peaches, French strawberries and Continental clothes, and we should not be in breach of our obligations within the EEC if we did. There is a good case for expansion of home agriculture, and this would be wholly in accordance with the policy of the EEC, which is that one should be 86 per cent. self-supporting from agriculture. I believe, for example, that this country could probably be a net exporter of beef in three or four years. Already it is a considerable exporter of beef to the Continent.
Next, the Government must tackle the question of land, and tackle it ruthlessly. The Prime Minister talked about his wonderful house building programme. It is fair to point out that completions for private and public sector building last year were the lowest for 10 years, which does not seem a very exciting message to send out to the nation. [An HON. MEMBER: "And the most expensive.") I am coming to that.
The price of housing land rose from about £10,500 to £20,000 an acre in one year, 1971–72. A house costing £5,000 in 1970, when this Government came into


office, now costs nearly £9,700, three years later. Moreover, as the Leader of the Opposition pointed out, the profits of property developers have risen by the equivalent of the total budget of the GLC. City rents here in London—one thinks of New York and Western Europe, in particular—are 400 per cent. higher than they are in most of our competitor countries. If the Prime Minister does not believe that, I can send him chapter and verse.
The Government must tackle this problem. They should tax all empty office buildings. There must be far heavier taxes on developers' profits. There may even be a case for property companies having a mandatory revaluation every two years and for there being a 35 per cent. capital gains tax on that revaluation. There should be a land fund capable of purchasing land at existing user prices. It is outrageous that agricultural land worth £1,000 an acre should at a stroke—I mean "at a stroke"—suddenly be worth £30,000 an acre for housing purposes.
We must look at the whole question of the supply of land which we shall require, over the next 10 years. I believe that we shall need up to 1 million acres of land in order to build about 6 million homes in the next 10 years. Therefore, the Government have to be seen to be acting, because they will never get a fair prices and incomes policy if this aspect of our society is allowed to go on unchallenged.
The monetary system must be dramatically changed. The Prime Minister is right in saying that we are not being pushed by our European partners. The longer they can keep Britain and her sick pound away from the European currencies, the better they will be pleased. But the fact remains that it is essential that sterling should become far less vulnerable—and that will not happen until we have a European monetary system. We should not press for that, however, until we have far greater democratic control over the European institutions—and this is where I part company with the right hon. Gentleman on the urgent need for direct elections to the European Parliament.
I do not think that the nation yet realises what a grave situation the country is in. One certainly would not think so

from the Prime Minister's speech. We have to establish industrial democracy. The Prime Minister talks about participation in the management of the economy by the TUC and the CBI. That is true, but it does not make much difference on the shop floor. Nor is it very optimistic when we have to wait for the Green Paper and wait and wait for participation until the CBI has made its final comments.

Mr. Tam Dalyell: What would a Liberal Chancellor of the Exchequer do on the crucial issue of public expenditure? Would it go on at the present rate, or would it be cut—and if so, where?

Mr. Thorpe: It would have to be cut.

Mr. Dalyell: Where?

Mr. Thorpe: I will say where. First, we must get our social priorities right, and those are to look after the pensioners, old or disabled, and to look after the low paid and those on low incomes. I believe then that we may well have to cut back on a lot of public expenditure. [HON. MEMBERS: "Where?"] If six hon. Members are all shouting, "Where?" at once, it is very difficult for me to explain where.
I would first of all defer the Channel Tunnel. I would make it a rail-only tunnel because, as the Leader of the Opposition said, otherwise it will require an immense amount of expenditure. I would cut back on public building.

Mr. Carter: Schools? Hospitals?

Mr. Thorpe: Yes. If the House could contain itself, this might be useful ammunition for the next by-elections. I would cut back by deferring all public building for six months, provided, if it were possible, as it is highly desirable, we move first towards minimum guaranteed earnings and pensions linked to average industrial earnings.
I happen to believe that unless we cut back on public expenditure—

Mr. Carter: Will the right hon. Gentleman give way?

Mr. Thorpe: When I have finished this point of my speech. I believe that the nationalised industries, public building and all will have to have reductions made. I believe that unless we do so, the currency of the country is going to


collapse and that we shall see not a 10 per cent. devaluation per annum but up to 30 per cent. per annum, that we shall see the value of our money going down not by 25p in the pound but being halved.

Mr. Carter: Will the right hon. Gentleman give way?

Mr. Thorpe: No. It will be very unpleasant because, if it is going to be done, the Government first have to be seen to be running their prices and incomes policy with fairness. That is why I believe that property has to be taxed to a far higher extent than ever before.

Mr. Carter: Will the right hon. Gentleman give way?

Mr. Thorpe: The hon. Gentleman has asked me four times and I have said, "No" on each occasion. If we are seriously told by the Opposition and the Government that in the present economic climate there must be no cutting of any public expenditure whatever, no deferment of any major capital schemes, then all I can say is, "God help the people and the economy," because the economy will collapse.

Mr. Carter: Will the right hon. Gentleman give way now?

Mr. Thorpe: It is about time someone said it, and said it here because, unless it is done, I believe that the living standards of this country will go down far faster than they have done even under the Conservative and Labour Governments.

Mr. Carter: Before the right hon. Gentleman leaves the question of public expenditure—

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. It is clear that the right hon. Member for Devon, North (Mr. Thorpe) will not give way to the hon. Gentleman. Until he does, I do not think that there is any real point in pressing him too hard or any harder than he is being pressed.

Mr. Carter: rose—

Mr. Thorpe: I would advocate—

Mr. Carter: On a point of order, Mr. Deputy Speaker. The right hon. Gentle-

man earlier clearly indicated that before leaving the question of public expenditure he would give way to me.

Mr. Deputy Speaker: That is not a point of order, but a matter for the right hon. Gentleman and the hon. Gentleman.

Mr. Thorpe: I did indicate that I would give way but surely I have discretion as to when. I wished to finish what I had to say about public expenditure and was not going to be bull-dozed by the hon. Gentleman. I will give way to him now.

Mr. Carter: May we take it from what the right hon. Gentleman said that if the Liberals were in the position of forming an administration then, for the next six months, building would be stopped on every school, every hospital, every housing development scheme, every geriatric ward, and so on? Is he saying that public expenditure would be limited like that?

Mr. Thorpe: The hon. Gentleman has put a straight question, and I will give him a straight answer—no. I have made myself perfectly plain. All I can say is that if the House of Commons does not understand it, I am sure that the electors at the next by-election will because I shall go down there myself to explain it.

Mr. E. Fernyhough: rose—

Mr. Thorpe: I am sorry not to give way to the right hon. Member for Jarrow (Mr. Fernyhough) but other hon. Members wish to speak.
I believe that the economy has been run by the present Government disastrously. The Chancellor of the Exchequer was fortunate that he did not have to see the faces of his colleagues behind him when the Prime Minister was giving his progress report. He can take it from me that they were not rapturous. I believe that the Government are right to try to pursue a prices and incomes policy but I believe that they have failed to get acceptance because it is not seen to be fair. I believe that if they can achieve the most important single qualification—get industrial relations right, which they will do not by a series of confrontations but doing something for the lower-paid workers—they will be going in the right direction.
What the Government need is a good dose of human psychology and a better


sense of social priorities. The Prime Minister is never very strong on psychology and the Chancellor of the Exchequer is not very strong on economic priorities. If they can get these right, then even this Government may be able to pull the economy right—but they have a long way to go.

5.43 p.m.

Mr. David Price: I am sure that the right hon. Member for Devon, North (Mr. Thorpe) will forgive me if I do not follow him in his remarks but leave him to the tender mercies of the hon. Member for Birmingham, Northfield (Mr. Carter), who has some unfinished business with him. I want to return to the main burden of the argument—the motion inviting us to support the Leader of the Opposition's proposition
That this House has no confidence in Her Majesty's Government's management of the economy.
Interesting though the Liberal Party's views are, I do not believe that they are really germane to the issue.
The Leader of the Opposition deployed a formidable list of criticisms, some of which were both relevant and damaging. However, many of them were simply his characteristic mixture of half truth and personal abuse with which the House and the country are only too familiar and to which they are now thoroughly unreceptive. The right hon. Gentleman's attacks on the Government's management of the economy would carry more conviction if his own track record when in Government were not available to us and if his party's rethink of economic policy had anything at all to do with reality. That is the only controversial point I will make today.
I acknowledge at once that there are in our recent and current economic performance a number of important features which must be worrying to us all and which are in my judgment matters for proper criticism by the House. I need mention only three to make my point. The rate of inflation is obviously unacceptably high. It is a threat to the whole social balance of our nation. Secondly, the growing trade gap is serious. It can be explained, as my right hon. Friend the Secretary of State for Trade and Industry explained it the other

day, but it cannot be explained away. Thirdly, the continued under-valuation of the pound has serious repercussions on our import bill, and, as the right hon. Member for Devon, North rightly pointed out, it is in part the cause of the size of our trade gap. These three factors in our recent economic performance are of major importance.
No Opposition can do other than criticise them. I agree with much of what the Leader of the Opposition said about excessive reliance on high interest rates. Even those who wish to use the monetary weapon would recognise that in the modern day and age we must use physical controls of credit as well as interest rates. I do not think many hon. Members have yet taken on board what would be the implication for trade and manufacturing industry if the sort of rates prevailing were to continue for any length of time. If we have to discount bills at 15 per cent. for long, then we are in a serious situation.
On the other hand—and this has not yet been brought out—the record of the Government has not been one of universal failure as the Leader of the Opposition would have us believe. Indeed, the Government have scored some important successes which, naturally, the "opposition"—on both sides of the House—are unlikely to bring into the balance sheet.
Let me mention a few. There has been an impressive increase in the rate of economic growth and a substantial and continuing rise in export earnings. British exports have never been more competitive. There has been a major reduction in our short- and medium-term foreign debt and a continued improvement in the real standard of living of the average man. The Treasury tells us today that the statistically average man was 6 per cent. better off in real terms in 1972 than in 1971. I freely admit that none of us recognises himself as the statistically average man. Fifthly there has been a substantial reduction in taxation, amounting to over £4,000 million a year. In addition there has been a major recasting of our whole taxation system.
By any account these are achievements not lightly to be dismissed and are not cause for censure. If we exclude the


import content of our inflation, the Government's counter-inflationary policies have been far more successful than appears to be the case superficially.
World events have been against the Government all the way. Right hon. and hon. Gentlemen will have seen this week's Economist. I would like to read its comment. It says:
The oddest feature of the present crisis is that it follows a year in which Britain has beaten the world in controlling domestic inflation. If as much attentions were paid to consumer prices as to the trade figures we would now be "top of the pops". This success has only been obscured by the effects of higher import costs which have accounted for nearly two-thirds of our price increases.
Of course this does not remove our high rate of inflation, but it does drive home my main point, namely, the highly exposed nature of our economy.
In my judgment it is world conditions rather than the actions of this or any respectable British Government which determine the economic parameters of what we can reasonably attempt to do at any moment of time. Presently they are highly unfavourable. I use the words "respectable Government" because I am assuming that we would not have a Government who would take complete leave of their senses, but who would try to adapt their policies to fit in with world conditions. As long as we have to import half of our food, half of our fuel and energy requirements, and nearly all of our raw materials, we remain a highly exposed economy.
I see no way in which we can escape as a nation the effects of major change in world conditions. Internally we can have transfer payments, and so on, and protect certain classes of citizen and certain industries, if we are so minded, but I see no way in which we can protect the nation as a whole from the effects of these price increases. I do not believe that, except very marginally, we have any determining influence on what those world conditions are. At times we in this House speak with a sort of latter day imperialist folie de grandeur, as if we really did have control over what happens in the world outside.
It follows that if we are to optimise our economic opportunities we must follow an adaptable economic strategy. This remains true whether we have a Government of the Right or of the Left. In the

language of navigation, we should develop techniques for contour following rather than pursuing fixed courses for too long.

Mr. Heffer: I agree with the hon. Gentleman that we are victims of world economic circumstances. Anyone who does not understand that does not understand the A, B, C, of our economic problems. Does the hon. Member not agree that we can deal internally with the property speculators, rising rents, the distribution of wealth within the country and, within the context of the world situation, do a great deal for our own people? This is precisely the indictment we make of the Government, that they have not done this.

Mr. Price: The hon. Gentleman is correct, and I thought I conceded the point earlier, that there are all sorts of opportunities open to Governments to act internally. Because I wish to be brief I will not go into them. The point I want to make, and I think the hon. Member agrees with me, is that whatever we do internally, by transfer payments and so on, the plain fact is that as a nation there is no way, if we are to maintain anything like the standard of living we have today—let alone improve it as most people want—of protecting ourselves from these increases.
Presumably it would be possible to go over to a war-time type siege economy with full controls on imports with full price controls right the way through, rationing of raw materials and so on. That would mean a very much lower standard of living for the vast majority of our people, quite apart from any ideological objections there might be to it. I think that we would all be against that.
In my judgment the whole contemporary political scene tends to exaggerate the extent to which any British Government have effective control over the many factors which determine the real course of our economy. On the whole I tend to the view that Governments in this country have a greater propensity for getting the control of the economy more right than wrong if they do not at the same time try to provide too much of the engine power for the economy. This is an important argument against too much public ownership.
This is a debate on a motion of censure. If the motion were carried the Government would fall and there would be a General Election. Hence debates such as these inevitably tend to become straight-forward party battles. I do not refuse a party battle when the occasion requires it, but today the occasion does not require it. The mood of the country is totally antipathetic to gladiatorial party battles. This is one clear lesson to be drawn from the recent by-elections. I would like to offer a few brief points in a chastened and, I hope, non-partisan spirit.
The first relates to economic growth. The Prime Minister in his speech today rightly drew our attention to our national record in recent years. Our economic growth has been very much lower than that enjoyed by our European neighbours. I should like briefly to quote a few figures to illustrate the point, because they are very telling. Between 1960 and 1971 we in this country averaged an increase in our gross domestic product, measured in real terms, of 2·7 per cent. In the same period France average an increase of 5·7 per cent., the Netherlands 5·3 per cent., Italy 5·2 per cent. and Germany 4·7 per cent. I make this as an entirely non-partisan point because it has been happening under both Labour and Conservative Governments. With respect to the right hon. Gentleman the Leader of the Liberal Party, he has not convinced me that if we had had a Liberal Government in any of those 11 years we would have done any better.
Various attempts were made during this period to get our economy moving at a higher rate. I am thinking of the attempts made by my right hon. Friend the Member for Barnet (Mr. Maudling) and also of those made by Lord George-Brown. Both ran into balance of payments difficulties and into an early overheating of the economy.
The present Government have dedicated themselves to succeeding where others have failed. I believe that this is an entirely right and proper purpose. They are running into difficulties, although to date they have done better than their predecessors. The difficulties have arisen because of world conditions. The floating pound, as the right hon. Member for Devon, North pointed out, has saved us from the more dramatic features of balance of payments crises

of the type which fixed parities brought about, but it does not protect us—and nothing can protect us, from the consequences of a deteriorating currency. Our economy is too exposed. And it is a fact which we ignore at our peril.
As for domestic conditions, we as a nation have an endearing habit of insisting upon enjoying the fruits of economic growth before we have earned them. This is at the heart of much of our domestic inflation. The revolution of rising expectations provides a further stimulus to our natural improvidence. I do not claim to be any better than anybody else. I am standing in the confessional on behalf of all of us pleading guilty to this endearing but inflationary habit.
We have reached a state of affairs where most of us expect as of right that each year we should be materially better off than we were the year before, irrespective of our own personal efforts, irrespective of the success record of the organisation for which we work, and irrespective of how the country as a whole is doing. That in an inflationary age we fight hard to defend our own personal economic condition against the erosions of a depreciating currency is, to my mind, thoroughly human, understandable and right, but our expectations have, to my mind, got out of hand. I know of no political philosophy which claims that every year everybody should be materially better off than he was the year before. Yet this is the gentle madness which we all entertain. I seriously suggest that we should get back to sanity.
Let us all preach the message of reality, which is that we cannot enjoy as a nation a higher standard of living than we earn. I know that some hon. Members will regard me as an old reactionary when I say that it is better to be sane than to be mad. I am convinced that we should continue with economic growth as our priority, but everywhere there are signs of overheating in the economy.
In the greater Southampton area, which I represent, I hear the whole time about labour shortages, long delivery dates, and so on. Therefore I believe the Government are right to aim at a lower growth rate for the next year or 18 months and to aim at a 3½ per cent. instead of a 5 per cent. growth rate. This is right. It would be wrong to press the Government very


much further because implicit in the measures taken by the Chancellor of the Exchequer is more deflation than many people and many critics have yet realised.
I said earlier that I regarded the present high interest rates as potentially punishing in their effect. It is also worth remembering that if we achieve a 3½ per cent. growth rate this year we shall need much of the new product to reduce the trade deficit and to cover the increased prices of oil and other raw materials. The House will recall the remarks made yesterday in the Observer by Professor Day, which I commend to everybody's attention. Professor Day has made some effort to try to assess what these price increases might cost. It means that the stage 3 pay proposals are economically in excess of what the economy can carry. I accept that politically it may be necessary to do so, but I am sure that any objective observer will recognise that in pure economic terms they are too high. I hope that this factor will be acknowledged more widely. This is clearly an effort by the Government to go a long way to meet trade union demands, and it goes beyond economic prudence.
We in this House should show a little more humility towards the problem of inflation, particularly about how to cope with inflation at the same time as having economic growth and as adapting sensibly to world economic conditions. We do ourselves great injustice, and certainly a disservice to the parliamentary system, by going around the country giving the impression that if we were in the shoes of the Chancellor of the Exchequer everything would be all right. The truth is that everything would not be all right. The public are a little sceptical about some of the pretensions of politicians as to what politicians can do about the situation. Perhaps I might end by quoting the words of my most distinguished constituent, Mr. William Cobbett, who wrote in the year 1822:
It is my decided opinion that the people, high and low, with one unanimous voice, except where they live upon the taxes, impute their calamities to the House of Commons.

6.2 p.m.

Mr. John Mendelson: The hon. Member for Eastleigh (Mr. David Price) certainly knew where he intended to finish, but I was a little surprised

by his opening remarks. He said that the present Government did not have before them a record of total failure. This must have given great comfort to the Treasury Bench, and particularly to the Chancellor of the Exchequer. It was as near to a funeral oration as anybody has yet come in this short debate.
This is not the time for general philosophy and lecturing. It is a time to take the Government to task and look at their record. I do not agree with the hon. Gentleman when he says that this is not the time to stage a fight. This fight has not been staged; there are no gladiators involved. My right hon. Friend the Leader of the Opposition has done what every Opposition Leader would do in his place when faced with a crisis in our economy. He has put the facts on the table and has asked the nation to judge through Parliament. It is no use trying to belittle the seriousness of the position by constantly referring back to what others might have done since June 1970. The Government could refer to the first years of their administration as well as to the last 12 or 18 months.
Having listened to the Prime Minister today, I say with regret that following his own speech he spent little time in the Chamber listening to the speeches of other hon. Members. This is becoming a bad habit. The old custom should be observed. When an hon. Member makes a speech, he should himself stay in the House to hear the speeches made by other hon. Members and should be there to answer any attack. I am in no way belittling the presence in the Chamber at the moment of the Chief Secretary to the Treasury, but it is the Prime Minister who is head of the Government. He is responsible for policies pursued by the Government and he should be here during the debate.
The Prime Minister spoke as though the first two years of Conservative administration had never happened, but it is essential to return to those first two years if we are to understand where we are. For instance, he spoke a great deal about his efforts to reach agreement with the trade unions.
I am anxious to put on the record three brief points in what I think is a debate that ought to concentrate on the reasons for the current crisis. The Prime


Minister has never given the House an account of why he failed to reach agreement with the Trades Union Congress. We always have to wait until the Trades Union Congress later publishes an official record, as it did not on the last occasion, before we know the facts. The Prime Minister talks as though it is a matter of accident that he failed to reach agreement with the TUC. Nobody can under stand the position of the miners, many of whom I represent along with many other Members on this side of the House, nobody can understand their feelings and their attitude to the present situation, unless one has gone into the details of the breakdown of the negotiations. The Trades Union Congress asked for special measures in these long-drawn-out discussions to deal with the ever-increasing rise in food prices and the Prime Minister turned them down, as the record will show.
I do not believe in spending too much time assessing the amount of responsibility as to how far world prices, the Common Market and the administration of the present Government are responsible. It is far more important to understand that there is a serious disagreement in this country on what ought to be done. The Prime Minister in these discussions flatly refused to do anything about food prices, in spite of the fact that he knew that the talks would break down on his refusal.
This afternoon the Prime Minister quoted the new General Secretary of the Trades Union Congress. But he did not quote what the General Secretary, Mr. Murray, said late on Friday evening when it was reported to him that the increase in food prices in the last month was more sensational than anything that had gone before under this administration. He indicted the Government because, in the face of these increases, the Government were bound to fail in reaching any kind of understanding with this section of the population who would immediately be affected by these increases.
That brings me to the position of some of my own constituents in the South Yorkshire coalfield. When one talks to them one finds, first of all, that the facts are not as stated by the Treasury Bench. The Lord President of the Council took part in a discussion in "The World at One" yesterday. Previously

there had been discussions about the situation in the coal mines. The right hon. Gentleman talked about an increase of 16 per cent. in miners' wages. Poppy-cock‡ The interviewer interrupted him and said that that would apply only to just under 30 per cent. of those involved. This is not the way to treat a mining community; they should be treated seriously by one of the most senior officers of the Government.
The Lord President of the Council permits himself to make such mis-statements in public. He had to backtrack after the interviewer put him right. I would prefer that Ministers knew their facts, rather than interviewers. After all, interviewers are not running the country.

Mr. Hugh Jenkins: Neither are Ministers.

Mr. Mendelson: They may not be running it very well, but they have quite a lot of power and influence.
I hope that the negotiations between the miners and the National Coal Board will succeed. Ministers are preventing the board from reaching agreement with the National Union of Mineworkers; Ministers have a hand in running the country, and I know what I am talking about when I say that. The facts are not properly presented. There is no question of everybody being offered 16 per cent. I deplore the general attitude of the Secretary of State for Trade and Industry when he tried to horrify opinion by saying that the miners might be earning £50 or more. How scandalous it is for a Minister to try to horrify opinion by making such a suggestion. Why is it that people who work in public relations can earn £5,000, £7,000 or £8,000 a year, with a car thrown in and a petrol allowance, and nobody says "Is not this a strange state of affairs?" The whole psychology of the present Government and of the Tory Party was given away in the horror and surprise expressed by the Secretary of State for Trade and Industry when he said that miners might be earning up to £56 a week.
We are badly behind many countries in Eastern Europe which have economic problems which they have not been able to solve but in which there is a respect for miners, for people who work underground and do the hard jobs. The whole thinking in this country has got to change.


Everybody must change his attitude. We must get used to the fact that the miners should be at the top of the queue in earning rather than those who do work which is far less hard and less dangerous. The Government never entered into the discussions with the Trades Union Congress or with the miners' leaders in a modern spirit which is appropriate in a community like ours.

Mr. Heffer: Will my hon. Friend confirm this? I have heard that, even if the miners got the full amount to which they are entitled under phase 3, the basic rate at the coalface would still be only £25·58p.

Mr. Mendelson: I will give a brief answer to my hon. Friend because I do not wish to go into great detail today. The people directly responsible for these negotiations have had a meeting, and there is some hope that a further meeting will follow and that this may lead us to a situation which we all desire.
I listened to Mr. Scargill, the President of the Yorkshire Miners' Union, on the radio yesterday and he said that he wanted to move away from the present average income ranging from £25 to £35 a week to a wage ranging from £35 to £40 a week. That was his answer. I advise my hon. Friends to adopt my attitude and not go into further details. These matters must be left to those directly involved in the negotiations. I shall resist giving way again because I do not wish to occupy too much time.
A point which is relevant concerns the general economic strategy of the Government. They argue—the Prime Minister in particular—that we are looking forward to a tremendous expansion in our exports. In spite of our political differences, we wish that everything he said in this respect would come true. But I have very great doubts because of the economic policy which the Government are pursuing.
One of the advantages of having an improved level of production is the economy of scale; the cost per unit of production becomes lower and, therefore, there is an opportunity to remain competitive over a longer period. Unfortunately, the Government on another front are completely undermining this part of the strategy by the way in which they

have allowed the pound to go down to such a tremendous extent.
The devaluation of the pound, to a far greater extent than the Government were prepared to admit when one challenged them nine months ago, leads to such an increase in the amount of currency that we have to pay for imports of necessary raw materials and machinery that it is doubtful whether the expansion in our exports to the degree that the Prime Minister announced the other day on television will be possible. If we have to pay so much more for those things which we need in the process of production, we are undercutting the lower cost per unit and allowing a situation to develop in which most of the economy of scale will be eaten up by the higher price that we have to pay for the things we import from abroad.
Thirdly, again on the Government's economic strategy, they are in no position to guarantee to the people with whom they are negotiating—not only the National Union of Mineworkers, but everybody—that they will be able to hold the cost of living in all its essentials. Therefore, they are in no position to say to trade union leaders "There is no need for you to ask for an increase which takes into account the tremendous inflation that we are experiencing."
Trade union leaders are obliged to reply "We know that the Government are not prepared to do anything about the cost of food and are not prepared to throw out of the window the Housing Finance Act which has built-in provisions for automatically increasing rents from time to time. Therefore, we are left with only one possibility: to formulate wage demands that keep pace with what has happened in the last nine months and what is likely to happen in the next nine months." Therefore, the Government not only have no standing in making an appeal to the leaders of the trade union movement but their policy makes it impossible for them to succeed.
What will be the result of the trade unions being forced to ensure that their members do not suffer a large cut in their standards of living as would happen if the miners accepted the proposals originally put forward for more than 50 per cent. of their members? What will be the result if wage demands increase? I have


tried to prove that this has resulted not because of a particularly radical policy on the part of trade union leaders, many of whom are fairly moderate in their normal policy and general approach, but because of the functioning of the Government's economic policy and their refusal to do anything about controlling food prices. The result will be that the cost per unit of production will again go up for this second reason.
Our indictment of the Government's policy is twofold. They spent their first two years in office frittering away time on class war. That was what they were determined to do and nobody can deny it. It may sound strange to the ears of a number of hon. Gentlemen, who are such good Conservatives, that the term "class war" should be applied to the policy of their leaders. But this is a fact of life and they had better accept it before the historians write about it.
Selsdon men spent two years frittering away time and doing nothing to prepare the nation for the necessary economic expansion that was required. First, they said "We will satisfy all the demands made by Tories throughout the land during the six years of Labour Government." That was their political strategy and it was just as faulty as their economic strategy.
Secondly, having done all that, there were handouts by the Chancellor in nine tax concessions to the same people under different guises. There was largesse for the property speculator. Indeed after one famous Budget, as the lonely survivor on the Treasury Bench will recall, and all the waving of Order Papers on its presentation, the Financial Times observed that by putting in this provision the property companies would increase their shares by a considerable percentage next day. So they did. Property speculation became respectable again.
The Government's political strategy was obvious. They were going to do all that. That is why I say that they pursued a class war for two years. After that they would turn to what they regarded as other essential tasks.
The Government's strategy has not worked. They have failed on two counts. First they have failed to carry out their promises. Secondly, beyond that, they have failed to replace their promises by a

sensible economic strategy that would have allowed them to go to the nation, particularly the producers, and say "There are difficulties beyond our control, but from the first day we took office we have conducted ourselves in such a way that we can ask the people to co-operate with us." Far from it. They conducted themselves in such a way during the first two years that the people's attitude soured.
No one can now deny that the Industrial Relations Act, on which we wasted so much time, has poisoned industrial relations. Nobody can now deny that the Housing Finance Act, on which we wasted so much time, was a class Act meant to punish those who live in council houses, because the Chancellor and others used to say that such people were earning too much money yet they lived in council houses. No one will forget the attitude of class war displayed by the Government during their first two years.
The Government now make the accusation that others are not responding, yet they are responsible for poisoning the atmosphere of British industry. It might be too late, but unless they now completely change course and make proposals to the trade union movement which include throwing the Industrial Relations Act out of the window, making completely inoperable, on their own initiative, the Housing Finance Act, agree to introduce significant food subsidies and give the country a guarantee that the kind of increases in food prices that we have seen in the last month will not be allowed to continue, they will be totally responsible for all the difficulties that we will face in future.
I have no hope that any such change will take place because, after the announcement on the television services on Friday evening that the sensational increase in the price of food last month was higher than at any time in 18 years, the Minister of Agriculture, Fisheries and Food made an official statement: "Yes, this is true, but next month there will be more increases." That was the right hon. Gentleman's immediate response. In a period of economic and industrial crisis he was virtually saying to the miners and others who are worried about the cost of living "You have had this sensational increase, but it is nothing compared with what you will have to accept in the immediate future."
That is the Government's strategy. The Opposition have done the minimum by putting down this censure motion. The indictment will be driven home, it will be spread throughout the country and the Government will reap their reward when the right time comes.

6.23 p.m.

Mr. Hugh Fraser: I shall not detain the House long. The hon. Member for Penistone (Mr. John Mendelson) opened his speech in a constructive way by discussing the real problem facing this country. That problem, whether one believes in growth or not, is energy supply. That is the matter to which I should like to address my remarks.
With respect to the hon. Member for Penistone, the present Government's record towards the coal industry is surprisingly good. The Acts of 1971 and 1972, which brought an enormous amount of capital into the coal industry, the Wilberforce award and so on, have gone a long way to putting the coal mining industry back to its rightful position.
Everyone in this country has probably made a not unnatural mistake about the energy requirements and the problems that we are likely to face this year. We must face the problem now.
The Government have shown prescience in the 1971 and 1972 Acts, and in building up stocks at generating stations. They have also shown prescience in the appointment of Sir Arnold Weinstock and others to try to produce an efficient nuclear power policy. All these matters have proved to be steps in the right direction.
But an endemic crisis which could not be foreseen, for reasons outside our control, was that the inevitable world demand for energy has suddenly been telescoped and encapsuled and has forced the world to a point where it could easily break all existing economic policy.
Admirable though the steps taken by the Government may be assuming normalcy in these matters, I believe that we are no longer faced with normalcy and that something more should be done. I am not a great believer in Government organisation and great dictums to achieve results. But I believe that the moment has come when we should look seriously

at the constitution of the Department of Trade and Industry. As the right hon. and hon. Members will remember, previously there existed the Ministry of Fuel and Power. There is now a very strong case for a Department of Fuel, Power and Energy. It was the previous Government, after all, who abolished the Ministry of Fuel and Power when it was absorbed into the Department of Technology on the fateful date of 13th October 1969. That decision, taken on the 13th of the month, should now be reversed.
That would mean that we should have a Minister who would be able to speak for the industries in the Cabinet. It is most important that there should be a Minister in the Cabinet representing coal, oil and nuclear energy. I do not detract for one moment from the great capacity of the Minister in charge of the Department at present, but the time has come for a concentration of power and decision on the great problems which face us.
I give two instances in which I believe that a Minister might conceivably have done better if he had been solely in charge. The first is the investment of the National Coal Board last year in long term projects. Right hon. and hon. Members who have studied the accounts of the National Coal Board will have seen that last year the investment in long-term projects, as opposed to short-term work, was a mere £6 million. That is exactly one-tenth, in 1972 values, of what was being invested in the industry 10 years ago.
The other instance is in North York shire. I am sure hon. Members will have read the letter by Colonel Lancaster, lately a Member of the House, published in The Times on 23rd October, about the new coalfield in North Yorkshire and the fantastic possibilities of that field. It seems to have been proven that no less than 2,000 millions tons of the highest grade coal is to be found there. It is of the highest grade in not only Europe but possibly the world. The average BTU of coal in Britain is about 12,000 units. This coal is greatly in excess of that figure. It is largely sulphur-free. It is one of the deepest seams in Europe, of about 11 feet. Hon. Members who have worked in the mining industry will know what working an 11-foot seam is like. This area of development should be speeded up. The Department of Trade


and Industry says that this will take eight years to develop, but with modern mining methods and the application of a flat out Beaverbrook-type Minister in charge this could be done in three or four years.
The time has come to look again at the organisation of the DTI. This country would greatly benefit if one Minister could be put in sole charge of energy and fuel supplies, responsible to the Cabinet.
There are, of course, far wider factors than the mere organisation in Britain, factors to which my right hon. Friend the Prime Minister rightly referred this afternoon. There is the question of the Arab boycott of the industrial world. I have spoken about this matter previously and I am glad that my right hon. Friend the Prime Minister used the words which at least could be interpreted as meaning that this might become an unacceptable threat to Western democracy. That should be remembered throughout the Arab world by those who are trying to use this backmail against parties and countries for political purposes.
I should like to thank the House for allowing me to turn the debate away briefly from wide generalisations about economics to the precise point which will destroy any policy of growth or social or other advancement—a breakdown of energy supplies. I ask the Government to consider most seriously the reorganisation of their Departments to deal more effectively with the threat that faces us all.

6.30 p.m.

Mr. Patrick Gordon Walker: The right hon. Member for Stafford and Stone (Mr. Hugh Fraser) made some very interesting comments, particularly about the setting up of a Ministry of Fuel, Power and Energy. I agree with his implicit point that Government Departments are rather too big nowadays. This is a new trend, towards which both Governments have moved. It seems to me that such Departments are impossible to manage properly. I wholly agree also that the coalfield which the right hon. Gentleman mentioned ought to be able to be developed much more quickly if one Minister and one Department were in charge of the whole thing.
One cannot for very long avoid the great challenge facing us, that of infla-

tion. But one of the difficulties here is that the Prime Minister has a particularly bad conscience about prices, because of the injudicious speech that he made on the subject in the General Election. It is this that leads him—this is one of the Government's troubles—to maintain that the Government and he are never in any way responsible for the rise in prices. There is always an alibi. Always someone else is responsible. It is not the Government or the Prime Minister. It used to be the trade unions and wage increases. It was also—the Prime Minister spoke of this today a little—recalcitrant industrialists who do not behave properly and do not invest enough. Above all however, the alibi nowadays is world prices.
It is said that world prices are outside our control; there is, and has been, a shift of the terms of trade against us. That has been one factor in the rise in prices, a factor which no Government of any kind could wholly offset. But it must be said also that the Government have a considerable share of responsibility for the rise in world prices too and not only in domestic prices. The Government's main responsibility here is for the balance-of-payments crisis which they have helped to bring about by a reckless financial policy. Instead of working somewhat more slowly and gradually, as he should have done, for an export-led boom, the Chancellor lost his nerve and patience and chose the soft option of a consumer-led boom. He did so by greatly increasing Government expenditure while reducing taxes. It is a fatally easy thing to create a consumer-led boom. Many of our troubles have arisen from this error.
The consequence of that was a great jump in Government borrowing, which was tantamount to fuelling inflation by the printing of money. The Government tried to guard against the obvious effect of a balance-of-payments crisis resulting from a consumer-led boom by floating the pound. But the predictable result was that there was a dramatic fall in the value of the pound. The Chancellor has brought about a rampaging devaluation of the pound. This has led inevitably to a great rise in the sterling cost of all imports—what are called world prices.
Owing to the continuing drop in the value of the pound there has been no


real chance for the secondary effects of devaluation, an increase in the value of our exports, to come into play. The steady sinking in the value of the pound has meant that that the primary consequence of devaluation, namely an in crease in import prices, has kept ahead of the increase in the value of exports.
The great error of a floating pound is that, if one wants the advantages of devaluation to accrue, one must have a fixed amount of devaluation. It is because of this that we have the appalling trade figures which have panicked the Government into desperate measures which will not solve the problem. It is no solution to a balance-of-payments crisis to attract hot money by high interest rates. Such money always goes out again.
What precludes the Prime Minister from doing anything constructive to remedy the dire results of his own policy is his obstinate and blind optimism. He is always convinced that things will come right soon and that the terms of trade will move our way. In the prevailing circumstances that is just hoping that the problem will go away. That attitude formed a good part of the right hon. Gentleman's speech. The problem will not go away. The producing countries are increasingly eating their own products, prices are naturally going up and the supply is declining. The insatiable demand of developed countries for commodities, including oil, has put up prices for a considerable time, possibly for ever. It is their optimism that has induced the Government to resort to temporary and makeshift policies.
An essential point is that the Government, instead of contributing to the rise in world prices, as they have done and are doing, should take positive measures to counter it. One measure they may now be beginning to think about, although it is late in the day, is to reduce Government borrowing by balancing expenditure with revenue, so that there is not a great, continuing borrowing need.
The prime need, however, is that we should once again increase controls on the flow of credit, especially bank lending. Credit for consumer spending should now be checked, and credit should be directed towards investment in industrial expansion, with special emphasis on

exports. This would not reduce the rise of world prices, or therefore our own prices, at a stroke, nor would it remove the rise, but it would remove the contribution which the Government are still making towards inflation.
It would at least mean that the Government were doing their best to reduce and counter the rise in world prices instead of, as at present, reinforcing and stimulating the rise. It would mean one more U-turn in Government policy, but another U-turn would hardly be noticed. This U-turn would be more valuable and decisive than all the others taken by the Government. It would help to tackle the intolerable scale of inflation, which is the major challenge of the day and which will continue to be so as long as the present Government are in office.

6.37 p.m.

Dr. Anthony Trafford: Human nature is somewhat frail. All the wonderful solutions that are continually propounded would probably be brought to nothing if the propounder were responsible for the consequences of what he suggests. Whatever party is in power, there is always a problem of sacrificing long-term for short-term objectives, or short-term for long-term objectives. The admixture is always extremely difficult to achieve. The last administration know to their cost how difficult it was in their circumstances to make up their mind on such priorities.
Those actions which my right hon. Friend the Chancellor of the Exchequer may take today will often have an extremely long time lag. We have seen three crises over seven years: a balance of payments crisis, dealt with by devaluation, followed by deflation, leading to stagnation of the economy and thus unemployment. The present Government then reflated with what has been described by the right hon. Member for Leyton (Mr. Gordon Walker) as a consumer-led boom. They did so because the short-term problem then disturbing everyone was unemployment. The un employment problem is receding, but we are now faced with the consequences of such a reflation, which one might well have expected—a certain amount of inflation, a tendency towards overheating of the economy, expansion of credit and all the rest. It is with great hesitation


that one would advise my right hon. Friend the Chancellor now to consider further restraint.
We have several choices before us. The argument of the Opposition—of the Leader of the Opposition and in particular of the Shadow Chancellor—has always been in favour of more severe deflation through increased taxes, control of credit and various other means, but there was every prospect of a recession in world trade even before the Arab countries raised the price of oil, and before oil sanctions, which are likely to make it much worse.
I heard on the news today that Japan has cut her expectation of economic growth down to what is for her a ridiculously low level. What effect will that have on commodity prices and the world markets? The United States and Germany will probably follow suit. If my right hon. Friend took action to cut economic growth now we might be building up even more trouble in precisely the opposite direction in about 1975, allowing for the time lag. That is not what anybody would wish.
Therefore, my right hon. Friend has taken action through a mild credit squeeze. I accept the suggestion that it may have been too broadly based, in that it is not specifically directed at certain people who are so often regarded as evil men. I refer to the remarks tagged on to every other paragraph of the Leader of the Opposition's speech about property speculators, land speculators and the like. I remind the Opposition, however, that the price of land will never be brought to a reasonable level, even by control, till inflationary tendencies are controlled, because people are encouraged to join in the flight to land by inflation itself in the first place.
In view of the possible slackening in world trade, oil sanctions and even a world recession and, therefore, a change in world commodity prices, it would be unwise not take advantage of continuing expansion and our present competitive position. Of course, the balance of payments is disturbing, but it can change quickly and dramatically. Members of the former Labour Government should know that better than most, because between October 1964 and March 1965 the position changed with great speed. It could

happen again. Interest rates throughout the world are tending to come down, and I can see no reason why ours should not follow suit—a step behind, perhaps, as necessary, depending on the figures. That seems to me to be entirely reasonable.
I should very much like to take up further time in answering some of the points made by the hon. Member for Penistone (Mr. John Mendelson), but I have a feeling that my reaction to many of his comments, his appeals about class warfare and all the rest, which I regard as nothing short of drivel, would be emotive rather than rational. It is nonsensical to talk in such terms. I will take up one point the hon. Gentleman made with great force, on subsidies. A subsidy is paid either by the consumer or by the taxpayer as a direct payment to keep the price of something down. Therefore, it is much more reasonable and equitable to elevate incomes to pay for it, which is precisely what happens through the various phases of the incomes policy and the changes in social benefits and pensions.
I shall not go into the miners' dispute, about which the hon. Gentleman, representing so many miners, knows more than I, who represent but a few. However, I understand that within the global offer there could be a considerable redistribution, which would make some difference to the hon. Gentleman's figures.
It is only too easy to be wrong in economic policy. I firmly believe that, allowing for the time lags, we should take great care not to draw the economy into deflation, stagnation, and further unemployment two years ahead merely because of an upsurge of feeling now, because of suggestions that there is a need for panic measures or that the situation is much worse than it really is.

6.44 p.m.

Mr. Ray Carter: I have been attending economic debates during the whole three and a half years I have been a Member. One of the most interesting things about them is that, from the highly prejudiced position from which both sides started three and a half years ago, we have moved to a position where hon. Members, particularly Conservatives, seek to rationalise


and get at the very heart of the matter. Whereas we heard a great deal of high-powered talk from them three and a half years ago, particularly from their Front Bench spokesmen, about the new Conservative policies that would get at the heart of our economic difficulties, we now wonder what sort of argument we shall hear from them in the next 18 months, if the Government survive that long. But perhaps they will not have another 18 months in power.
The Prime Minister took up that theme particularly in his speech today. At some stages of his speech I thought I was listening to a WEA lecture, so fundamentalist was his approach. His speech was about a million miles from the speeches he and other then Opposition Members were making three and a half years ago about what they would do when they had charge of the economy, when they took hold of the reins of Government. That enthusiasm carried them into their first 18 months or two years of Government. Competition was the answer. We had full-blooded Conservative policies, such as those mentioned by my hon. Friend the Member for Penistone (Mr. John Mendelson). They have come to nothing.
Listening to the latter part of the Prime Minister's speech, one might have thought that this was not a censure debate and that the motion should be directed at the success of the Government's policies. When we have gone from one failure to another, many people have said that the Government's economic policies over the past 18 months or so have been something of a gamble. I have never taken that view. It is not a gamble on which I would have put any money. It never was a gamble in the strict sense of the term, because the Government were trying to tackle deep-seated, long-term problems with short-term measures.
The trouble with the British economy is that our difficulties can be tackled only with long-term solutions. If we are ever to get out of our difficulties, sooner or later we must understand that our problems are deep-seated. It matters not in that regard who wins the next General Election. Unless the party that wins it goes into office believing that the nation must come to grips with its deep-seated problems, we shall merely slide even

further down the slippery slope and on towards complete disaster. From that point of view the Government have been misleading the country for the past three and a half years.
But the Government are not alone. We have not been able to read a leading article or any of the prominent financial or economic magazines without reading complete approval of every aspect of Government policy. Indeed The Times is behaving as though we were living in a world of complete economic success, while the true situation is that we are not. There would not have been this debate today if there were not doubts about the true nature of the economy. We stand on the very edge of disaster, and that is a strange situation in which to find ourselves when only two years ago there was talk about entry into the Common Market and all the great opportunities that that would provide for us.
It was said that our trade would expand because there was a massive market of which we should be able to take full advantage. It was said that that was precisely what the British economy wanted. The Government's call was "Give us the market and success will come". As the Prime Minister rightly said, trade for us is the crux of the matter. It is vital to our economic performance, and we must deal with it in terms of industrial production.
In 1963 just 29 per cent. of our import bill was accounted for by industrial products. After all, we are an industrial nation. We live by trade and by selling our industrial products. In 1967 that figure had risen to 39 per cent., and this year it is running at 50 per cent. We were to sell all these industrial products to the Common Market, but what has happened since our entry? As the Prime Minister said, we are now importing machinery, cars, industrial products, washing machines, and so on, from the Common Market.
The reason for that is simple. It is that we cannot produce the goods. That is not because there are too many strikes, although it is true that strikes produce a loss of production. We cannot produce the goods because there has been insufficient investment. If the House of Commons had spent as much time talking about the problems of investment and of


British industry as it has debating the so-called successes of the Government's economic policy, we might not have been confronted with the present situation.
In an intervention in the Prime Minister's speech I referred to the motor car industry. It is strange that British Leyland has had to ration its production not merely to Europe but to the world. The corporation just cannot produce enough cars to go round. There is a tremendous demand for British cars, and it may be that the industry could have satisfied the home demand had it not been for Government policy. They took the lid off the economic machine far too quickly, and as a consequence they allowed European and Japanese manufacturers to come in and meet the increased demand.
A short while ago Lord Rothschild devoted a short but controversial speech to the whole question of investment priorities. He suggested that we should invest all the resources that we had to spare in those areas of industry and the economy which could show the most benefit. I submit that rather than invest in projects such as the Channel Tunnel, Maplin, Concorde, and so on, none of which, either in the short term or the long term, will show a real economic return, any spare resources should be invested in British industry.
The Opposition have made known their plans. We intend, either by public ownership or by public investment, to redress the imbalance in investment over the last 20 years. Lack of investment is the root cause of the present difficult situation in British industry, and we must get to grips with that problem.
Our economy is out of balance. It is probably more out of balance than that of any other advanced industrial nation in the Western world. Of 17 OECD countries we come eleventh in terms of personal consumption. Day by day we consume the seed corn which should be invested in productive industry. That fact cannot be escaped by the country or by the Government.
It is interesting to see which countries are below us in the table. They are Spain, Portugal, Ireland, Italy and Iceland. We are supposed to be an advanced industrial country competing with Germany, France and the United

States, yet we have a record such as that. In capital formation we are fifteenth out of 17 and we are steadily getting worse. Between 1970 and 1972 personal consumption increased yet again and took 1 per cent. more while investment declined by a further 1·2 per cent. Those facts are set against the constant output of Government propaganda that we live in a world of economic success. What is happening does not add up to any kind of economic success, and it is a blatant lie to suggest that the Government are getting to grips with the basic economic problems facing the country.
I am expressing my own opinion but I believe that I speak for many of my hon. Friends on this side of the House, and some Conservative Members too, when I say that we did not come to the House of Commons to preside over the bankruptcy of our country. We came here not merely to improve the lot of our people and of our constituents but also to get to grips with the basic social inequalities that one finds. Most of us know that in order to carry out our task we have to get to grips with our basic underlying economic problems.
I sincerely hope that it is not too late—though I suspect that it is—for the Government to take that on board. The Prime Minister certainly must do so before he becomes responsible for something more than just economic collapse. It could be that, if we go on as we are now, we shall face a social and political calamity of a kind that has never before been in prospect for us.

6.58 p.m.

Mr. Charles Fletcher-Cooke: I have two points, one short term and one long term, and I shall make them as quickly as I can. The Government are driving the economy at a hot speed, and hotter than any Government have ever done in my lifetime. That is a brave thing to do. The previous attempts to drive the economy at this speed ended in disaster, largely due to a failure of nerve, and I hope and pray that this one will not, but it is already having effects, particularly in the country.
In my constituency, and I dare say in every other urban constituency, there is a grave shortage of labour. It is found particularly in the service industries in the towns. London is the most dramatic example of that, but the problem is not


restricted to the metropolis. The short age of labour in the service industries causes great aggravation, great inefficiency and much ill will. If the Government continue to drive the economy at this rate, they have to do something about it.
What can they do? There is no reserve of labour readily available, or at any rate visible. There is no possibility of further immigration, for example. I do not think that there is much possibility of further recruitment of women. There is, however, one pool of labour particularly suitable for the service industries and it would have a remarkable effect. It is among those of older and maturer years.
I beg my right hon. Friends on the Treasury Bench to look with urgency at the possibility of suspending the earnings rule as it relates to pensioners. I know the difficulties, the bitterness, the anomalies and the history of the earnings rule, and I know that the present Government have raised the level considerably, but if it were to be suspended altogether, if not, as I should prefer, abolished, there would be a dramatic increase in the availability of sound reliable labour in the towns, particularly for the service industries, and much of the ill will and inefficiency liable to be experienced during the winter and into the summer would disappear.
After all, we have taken out from the other end of the age scale a good deal of labour by the raising of the school leaving age, and with modern medicine and the increase in the expectation of life it should be possible to compensate for that in some way, at least to some extent, by an inducement for those in their 60s to work, as would happen if the earnings rule were suspended.
I do not believe that the trade unions would object to that in present circumstances, although in the origin of the earnings rule they insisted that it should be imposed. I asked my right hon. Friends to consider that as a matter of urgency, because it could be done quickly and it would have a dramatic effect in easing the situation. That is for the short term, and I now turn to my suggestion for the long term.
Every category of worker has been frozen in its position on the ladder of

incomes about a year ago. That was phase 1. We are now in phase 3, although it is not so much phase 3 as phase 2b or phase 1c in the sense that all categories are still pretty well as they were in relation to each other a year ago. The whole ladder has shifted up a bit and in some instances there have been variations in differences in pay, but I do not know of a whole class or category of worker that has jumped up one or two places in the league table or fallen down one or two places.
If phase 3 is operated as it appears it will be, that state of affairs will continue, but it cannot go on for ever. It is not possible to say that the relative value to the community of, or the relative demand for, different classes of labour is fixed for all time as it was in November a year ago. No such freezing of relativities has ever occured for so long in our history, and I do not think that it can continue.
The Government must do one of two things, and fairly soon. They must either have a proper panel, a standing commission, on job evaluation, which is what some Opposition Members are advocating, even though it means that some groups will have to go down while others go up in the relativities of the league table, or they will have to return to market forces, in the way that some of my hon. Friends would prefer and accomplish the same sort of movement within the league, because then, if a service is not in such demand, the employer does not make so much money and cannot afford to pay grossly increased wages.
If one were to return to that, it would depend on a large measure of denationalisation, because the sanction of not being able to afford to pay exorbitant wage claims in practice would not apply to nationalised industries. Therefore, until and unless the Government are prepared to embark on a large-scale denationalisation policy, it is impossible to revert to the market forces position. That is where I part company from some of my hon. Friends.
But if we are to do it the incomes policy way, we must devise machinery for job evaluation of some sort. It is absurd that every week some 500 miners should be leaving the industry, as we have been told in speech after speech. If the value of the mining industry at this moment is as great as everybody agrees it to be,


it should be possible to have a system of promotion, not merely by giving them more in the terms that are implied but by, if necessary, giving some other people less. We must allow for those changes in society made by society's regard for and demands on its different categories, and we have to have machinery for that adjustment.
If we are not to have market forces, we must have some agreed system by which these relativities may be altered. We had a White Paper making an examination not merely of anomalies—anomalies are very small matters although much the concern of civil servants among others—but we were promised a White Paper on relativities, so opening up the whole subject of the relative value of and the relative demand for whole sections of workers one with another.
My final question to my right hon. Friend is when we are to get that White Paper relating to relativities. How big, how important and how wide is to be its scope? If its scope is as wide as I hope, will the Government provide machinery for judging relativities in a world that is changing rapidly and where it is impossible to keep everyone frozen on the rung of the ladder where he stood 12 months ago?

7.8 p.m.

Mr. Edwin Wainwright: I will not comment extensively on the speech by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) but I will take up what he said about old-age pensioners returning to work. There is much in the principle that he outlined, but one must always be careful lest bad employers take advantage and use pensioners as cheap labour. That is not to be tolerated at any time. I sympathise with much of what he said. If pensioners are fit enough and strong enough to return to work, they should not be prevented, but I prefer them to have a sufficient pension for them to be able to retire and lead a life of leisure, for after 50 years of work they deserve it.
The hon. and learned Member kept his comments about job evaluation at the level of the workers. If we are to have job evaluation, it must be at all strata of society. We might be able to prevent some people from having such large salaries

without pushing some workers further down. It is not only a matter of wages, and I shall talk about the mineworkers later.
The Government have shown that they cannot carry through their idea of "one nation". Their policies throughout have been to divide the nation and if they have not done it deliberately they have done it through incompetence. Too often they have proved themselves incompetent to govern the nation. If that were not so, why are we in our present mess? It is all very well talking about increasing the rate of growth, but if there is a bank rate of 13 per cent., if the cost of living is increasing tremendously and if there is unrest in industry we must examine just what has gone wrong.
The Government came to power by false pretences and the majority of their supporters are disappointed with them. That was proved in the recent by-elections. Hon. Members may ask how the Labour Party fared, but we must begin to look forward and not dwell on the past. Some of the issues on which the Government promised action have been dealt with. They quickly reduced direct taxation but indirect taxation was increased and they thereby hit the poorer worker while giving more to the rich. The Prime Minister said that he would cut prices at a stroke but in the first 12 months the Government allowed prices to run riot in order to eliminate the differences in the cost of living between Britain and the EEC. They have just about achieved that aim. It is now almost as expensive to live in Britain as it is to live abroad.
When the Prime Minister referred to cutting prices at a stroke, he was either deceiving the nation or he was not up to the job. He should have known, and he must have known, that with the external influences which exist no one in Britain could cut prices at a stroke, least of all a Tory Government which believe in a free market. The cost of living was encouraged to rise well before Britain joined the EEC. The value of the pound has fallen to 75p since the Government came to power but that has not deterred the Prime Minister from soldiering on. He promised a new rent Act and we got it. It has caused more dissatisfaction among local authorities than any other local government legislation.
The right hon. Gentleman promised to control the trade unions, and he produced the Industrial Relations Act. The Government talked about increasing growth and creating one nation, but they were determined to teach the trade unions a lesson. There is now such a deep division between the trade unions and the Government that there seems little hope of their coming together and working to create the one nation to which the Prime Minister so often referred.
We have seen phases 1, 2 and 3. Almost all trade unionists believe that the Government have gone out to smash the power of the unions by restricting wages and by not increasing real growth. All too often we have heard from the Tories that their ambition is to create a society where people are dealt with fairly and justly by their Government and their employers. But it is only the disparity in living standards in Britain which brings out the militancy of the workers. What do the Conservatives expect when ordinary citizens become dissatisfied with the way the nation's wealth is distributed? Trade unionists are determined that it should be distributed more fairly. How do the Government expect the workers to give of their best and to co-operate when wages are held down but property speculators are permitted to make vast profits? What do they expect the workers to think when on 6th November Lord Samuel became worth £1,675,000 because of a property deal? How do the Government expect the workers to co-operate with restrictions on wages in these circumstances?
The Government declared a state of emergency because of the miners' overtime ban yet they were unconcerned some days before when the newspapers said that oil supplies were threatened by the Middle East crisis. It was the miners who get the blame for the energy crisis, not the shortage of oil. A few weeks ago the Government were happy about the level of coal stocks. They thought there would be a confrontation with the miners and they had made certain of 11 weeks' supply at the power stations and a further four or five weeks' supply at the pitheads. They were ready for the confrontation when the Middle East crisis blew up.
The Government should be honest with the nation even if they cannot be fair

to the miners. They should say why a restriction is being imposed on the use of petrol and oil. Last time the Government challenged the miners the Government lost because they were being unfair to the mining community. What will they do now? The last time there was the Wilberforce inquiry. The Government were most upset with the result of the inquiry because it gave the miners one of the best increases they had ever had. Wilberforce said that the miners had a special case and everyone, the Government included, accepted that. If they had a special case then surely, with the value of that increase eroded, they have a special case now.
There is some reason for 600 to 700 miners leaving the pits every week. Some of the men are giving up in areas where jobs are scarce. But they are leaving because they are fed up with being treated so badly by the country. I spoke to a young miner—I call him young but he is a strapping lad of 40—who was a very good worker when I was there, and that was some years ago. We used to say that he could move mountains. He told me that he was leaving the pit because he had been offered a new job at £35 a week only five miles from home. He then told me, "After I have been there a fortnight or three weeks I shall have £42 a week." It takes only a short time to train such a man.
It is no good thinking that miners cannot adapt themselves and be retrained. They can go to practically every industry unless the work is highly specialised. The young man to whom I have referred—well, he is 40 years of age—is the kind of person we are losing. If we want a mining industry and if coal is vital to the future of the nation, the Government must help the National Coal Board to pay satisfactory wages.
Reference has been made to subsidies. Some hon. Members think that that it is crime to pay a subsidy. Practically every developed nation in the world subsidises industries. Our railway system extends for approximately 11,500 miles. I believe that the subsidy is approximately £30 million. Of course, it has been much reduced. The railway system in West Germany covers about 17,500 miles. The West Germans subsidise their railway by approximately £400 million. They recognise that it is vital to have


a good transport system. If it is necessary for us to have a good coal mining industry we must ensure that it is made viable.
However, we must remember that we cannot have coal without miners. I cannot understand the Government's reluctance at this late hour. They dragged their feet on the last occasion and caused a confrontation which, if it had gone on much longer, and if we had not had Wilberforce, could have been a calamity for the nation. They have dragged their feet again. The Government are saying that the miners must come within phase 3; it seems that they may be prepared to move a little. Unless we pay the miners more we shall not have any miners.
The Government have blamed the miners for the present situation in the oil industry. They say that the miners are responsible. At Question Time today—I hope that hon. Members will read HANSARD tomorrow—whenever reference was made to the oil situation, coal was mentioned first and the oil industry second. It is not the mining industry that is causing the present crisis in the oil industry. The reduced supply of oil from the Middle East is responsible. If there had been no oil dispute, if there had been no confrontation in the Middle East and oil had been allowed to flow naturally, there would be no crisis today.
What have the Government done? They have said that the schools shall not be heated. They never discussed the matter with the Secretary of State for Education and Science. It is extra-ordinary that they can be so foolish and imprudent. Next, they said, "We must show that the miners are again in the wrong. We will spread some more dissatisfaction." Consequently they stopped the elderly people from attending churches on a Sunday. That is a disgrace. It was done with no warning. There was no opportunity for use to be made of alternative fuels; there was no time to arrange anything. The Government were not prepared to give even a little consideration to elderly people attending church.

Mr. Albert Roberts: My hon. Friend seems to be trying to suggest what a good many people are thinking

today, namely that we need a good energy policy. Oil and coal are tied with nuclear energy. Does my hon. Friend agree that it is high time that we had a real energy policy such as we have been asking for many years?

Mr. Wainwright: It is time that we had such a policy. It is time that we planned the economy. Every firm plans its affairs. Why do we not plan the whole country? We must have a planned country. Of course, we must look after our indigenous fuel. If we do not do that we will be held to ransom.
The word "blackmail", which has been used in references to the miners, should not, it is suggested, be so used against the Middle East. It is said that we must not fall out with the Middle East countries. It is suggested that caution is necessary, otherwise our supply of oil will be stopped in the same way as the Middle East countries have stopped the supply of oil to the Dutch.
Unfortunately the Government do not believe in a planned economy. They believe in market forces. That is a belief in a system which has caused terrible strife throughout the world for many decades. There must be a tendency to understand what is fair and what is just. It is necessary for a Government to have such understanding if they are to live in a democratic system. As I look at Conservative hon. Members I lose a little faith and hope. It seems that democracy will be allowed to go by the way, and that they are prepared to allow it to go so that they may retain power.
I hope that the Government will look at matters in future a little more sensibly than they have in the past. I hope that they will ensure that ordinary people get a fair share of the wealth which they produce. I hope that they will take action against people who are making thousands of pounds by a stroke of the pen. Not so long ago there was the case of Sir John Stratton. Anyone who has taken part in local government can quote cases in which fortunes have been made out of the sale of land which local authorities have been responsible for developing and thereby creating an enhanced value.
The first thing that the Government should do is to prove to the workers that they mean to stop the fortunes which


are being made by land speculators. They should also investigate the lump. That is causing more dissatisfaction in regulated industry than anything else. How can we expect miners to be satisfied with £45 a week when they hear about bricklayers and bricklayers' labourers getting £90 or £100 a week? It is so easy for the employer to put the cost of paying such wages on to the cost of the building.
Further, the Government must do something about the coal mining industry. They must make mining a better job for the miners. They must ensure that the mining industry can retain its manpower and thereby produce a guaranteed amount of coal. That is necessary, as coal will be required as one of our major fuels.

7.29 p.m.

Mr. Angus Maude: I was charmed to hear the hon. Member for Dearne Valley (Mr. Edwin Wainwright) talk about the need to plan the economy. That has a nice old-fashioned ring about it. I wonder whether the hon. Gentleman thinks that the economy is still plannable? How can we plan an economy when we have an increase in world food and commodity prices of a size which practically nobody predicted'? How can we plan an economy when a Middle East crisis and the unpredictable reactions of Arab oil sheiks in the Gulf can make a difference of £400 million to a country's balance of payments at the drop of a hat? That is an unplannable economy. Heaven knows—I readily admit it—market forces do not work very freely or very well either. No individual can hope to predict and plan the economy as a whole.
The best that anyone can now hope to do is to forecast what can be forecast within the limits of forecasting as best he can, to allow market forces to operate as best they can where they can, and to take pragmatic action almost from moment to moment as we go along. Nowadays, this is the most that one can hope to do to plan an economy.
I was educated, trained and brought up as an economist and then as a financial journalist. If I had said to my tutors or to my City editors that there would come a state of affairs in which it would be possible simultaneously to have, as we

had two or three years ago, rapidly rising unemployment and rapidly rising wages, they would have said, "This is impossible. Go back and read your classical works of economics again".
Having learned my economics in the pre-Keynesian era, I adjusted myself to Keynesian economics. No one has yet adjusted himself to the post-Keynesian economic era. This is one of the troubles.

Mr. Fernyhough: rose—

Mr. Maude: No. Many hon. Members wish to speak and I must not give way. If I give way once, I shall have to give way all the time.
If we talk, as Governments have to talk and as Oppositions tend to talk, in terms of macro-economics, the only effect we shall produce is that Governments and politicians, on the one hand, and the people, on the other, will not understand one another at all. Politicians—and Governments in particular—and people are getting completely out of communication largely as a result of the determination to talk in terms of macro-economics.
Talk of growth and economic expansion is all very fine. Everyone thinks that he knows what growth means. The Government know what they mean by growth. They can measure it in statistics. The Prime Minister can talk of the standard of living being 6 per cent. better, of production up by 17 per cent., and so on. But my hon. Friend the Member for Eastleigh (Mr. David Price) was absolutely right to point out that nobody identifies himself as the statistical average man. The people who have got better than 6 per cent. increases in their standard of living do not notice it or do not consider that they are all that better off, and many people who are below the statistical average know jolly well that they are being cheated by those who talk about a 6 per cent. increase in the standard of living.
At the same time, I greatly doubt that Governments and their advisers know what is going on at the grass roots in terms of what people think and feel about what is happening to them. Of course, there can be a period of economic growth and expansion deliberately provoked and encouraged. The Government know that what they are trying to do is to raise the standard of living of the community, to


increase its prosperity, and to extend this as far as possible in the future, building up by investment for a brighter future for everyone.
In fact, however, expansion, as most people know, involves quite a hard time for a lot of people while it is getting under way. A lot of people are squeezed by the inflation which is inseparable from growth. If you ask people what they think economic expansion or growth means, they will say "Inflation". It is no good our saying that theoretically it need not involve inflation and it does not always involve inflation. The truth is that, in their experience, it always has. With an absence of inflation or a slowing of the rate of inflation comes economic stagnation, a total lack of business confidence, no investment, and probably rising unemployment.
It may well be that the situation today is better—I have little doubt that it is better—but let us not forget that inflation squeezes a great many people, some of whom have no recourse to bargaining power or in any other way—people who pay too little income tax for the Chancellor to be able to help them by tax reductions, and those many others who are above the social security level and cannot be helped that way either. These are the people who are squeezed, just as many small business men and single-person firms are being squeezed by pay and price controls, by the competition for labour which is being poached from them by larger firms, and so on.
It seems to me, however, that there are certain things which Governments simply must try to do in such circumstances as the present. One is to try not always to think and talk in terms of the statistical average man and of macro-economic figures but to try to talk to Mrs. Brown the pensioner, to the young executive who has been moved to a new job and cannot find a house, and so on. Let them try to understand what is happening. Then, perhaps, the people will begin to try to understand the problems which Governments have in their turn.
The trouble is that a lot of people using their common sense to look at the situation as it is do not think that what Governments and politicians talk about or do has any relation to common sense. The common sense of ordinary people,

let us remember, is sometimes a better guide than that of politicians, especially politicians in opposition who have neither responsibility nor power. For an Opposition to tell us, as several hon. Members have, that the country is on the verge of disaster yet to come up with no prescription to get it out of disaster except to nationalise most of the rest of industry and to increase everybody's taxation over the average wage by an undefined amount as a recipe for improving confidence and increasing investment and as a recipe for halting the decline in the value of the pound is more futile than anything I have ever heard.

Mr. Heffer: rose—

Mr. Maude: No. I said that I would not give way. Even though the hon. Gentleman is my favourite Liverpool Member, I cannot make an exception in his favour because I wish to summarise a few points and then to sit down.
I was talking of the need to try to understand the common sense view which so many people take of our problems but which leads them to the opinion that common sense is not being applied to them.
First, food. Most people would judge, and say, that when world food supplies are short and world food prices are soaring, with disastrous effect on our balance of payments, the sensible thing to do is to grow more food. It comes as a shock sometimes when somebody asks why should not more food be grown. The simple answer is that we should grow more food in this country, and we should grow it more intensively. The time when we could carry on with one barley crop after another has gone. We must grow a much higher percentage of our high protein foodstuffs of all kinds.
Next, I entirely agree with what my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said in talking about a shortage of labour. Incidentally—I do not want to get side tracked here—I must point out that there is no shortage of labour. There can never be a shortage of labour. What people mean when they talk about a shortage of labour is inflation, that we are trying to do more than we can with the labour we have.
But, be that as it may, when there is a shortage of labour in certain industries, it is, as my hon. and learned Friend said, manifest nonsense to continue the earnings rule for pensioners in its present form. He is absolutely right to assert that we could solve quite a proportion of the problems of the service industries and of the light jobs by encouraging more pensioners to go back to work and earn a little more. This would help in many ways.
My last point, and one which convinces many people that politicians as a whole, industry and economists and everyone have taken leave of their senses, is the waste of physical resources which has been going on in the Western industrial world and in this country for years. Most people know that the time has come when this has to be reversed, that, at a time when we have seen a 90 per cent. appreciation in world commodity prices, when there is an increasing shortage of so many commodities, not least fuel resources, we can not go on with an economy of conspicuous waste any longer.
Any sensible person in this country will tell us that that is true—and has been saying so for quite a long time. But it has always been possible up to now to suggest that new oil discoveries in the Sahara or Nigeria and new mineral discoveries in Western Australia would make everything all right in the long run, that we should never get to the crunch. But we are now getting to the crunch and we have to stop wasting raw materials and get to the stage of using our fuel and resources sensibly.
For example—and hon. Members know that this is not the first time I have said it—it is absolutely crazy to be encouraging freight to leave our railways and go on to the road at the rate we are doing in this country when, on average, for long hauls freight taken in single containers on the roads uses about four times as much fuel per ton-mile as it does on long runs on the railways.

Mr. Heffer: Better plan it, then.

Mr. Maude: If the hon. Gentleman thinks it can be planned the other way, he has only to look at what happened under his planning Government. If anything, what happened then was rather

worse. They closed down more railway lines than at any time since. We have to stop trying to attract more freight off the railways on to roads by building ever larger, ever more expensive and attractive roads for it to go on. The new motorways planned for the late 1970s and the 1980s will be half empty at present rates and the freight they are being planned for ought to be put on the railways.
I am entirely in agreement with those who have said that they are in favour of a Channel Tunnel, but a tunnel deliberately designed to encourage roll-on-roll-off road freight concentrated into one part of the country must be not only environmental but economic nonsense as well.
There are all sorts of other examples of waste of commodities. The waste of fuel in lighting and heating in this country simply cannot be tolerated any longer. We have to get down to the question of recycling materials. It is nonsense that in these days we should have a shortage of paper and newsprint when more paper is being wasted than one would imagine. Every hon. Member knows that, how ever conscientious he is, about one-third of his morning's mail goes into the waste paper basket after only a cursory glance because people are simply existing to turn out paper and send it to people who do not want it, and are doing so merely to keep themselves in jobs.
Finally, it is absurd in times like this that we should be living in the age of the non-returnable bottle. It is not only an economic but a social and environmental outrage. It is not only grossly wasteful of raw material, but every local authority is having to take over more and more acres of land in order to dump the damned stuff at enormous expense.
Until we in the Western world come to our senses and start recognising that resources—land and physical resources got from land—are scarce, will be more expensive and have to be economically used, no one in the country will think that we have any idea of the realities of the situation. These are the terms in which the Government should now be talking. I hope they will get a move on.

7.45 p.m.

Mr. John Stonehouse: The hon. Member for Stratford-on-Avon (Mr. Maude) made a very bad start


but he improved as his speech went along until he had practically all of us on this side of the House applauding him. His argument is for a great degree of Socialist planning. I am glad that at least in that respect we have him on our side.

Mr. Heffer: That is the logic.

Mr. Stonehouse: It is significant that in the debate there has been a very large measure of agreement between back bench speakers. I think that that underlines the seriousness with which the House of Commons is approaching this subject and I think that the Prime Minister in his speech, failed to match the mood of the House.
The problems of Britain's economy are caused by a number of factors both within and outside our control. If we had been able to manage the factors within our own control the external causes of the problems would not have the disastrous effects that they have on us from time to time, and no more so than today.
No Government of the past 20 years have been able to inspire the country to break out of the lethargic condition induced by the end-of-empire syndrome. We have acted as though the rest of the world owed us a living, we have watched complacently while other countries stole our traditional markets, and we have allowed our industry to score consistently lower rates of investment in new machinery and new techniques of production than practically any other industrial country. We have become a low-productivity, low-wage economy as a result of this failure over the years to invest in industrial expansion and higher efficiency.
The home of the Industrial Revolution has become the net importer of machine tools and now, even, of cars. Our leading stores are scouring the world for high quality textiles because they are not avail able at home. The television set manufacturers failed to tool up for the boom in colour viewing, so we have had an inrush of television sets not only from Japan but also from countries such as Finland.
During the last two decades all Governments have failed to get the message across to the nation, and the present Government have failed worse than most because, for the first two years of their

term, they pursued irrelevant policies, bemused as they were by the vision of Selsdon Man bravely shooting down lame ducks. Before long, the so-called lame ducks had to be revived and Selsdon Man himself is buried. What a waste of time all that was—but at least the Tory Party is no longer the party of extreme dogma. Its economic policies are based on pragmatism.
The worry we have today is that some of the pragmatic policies are still very wrong. In their endeavours to reduce unemployment and induce a higher growth rate the Government started a consumer boom and money supply bonanza which have stoked up the domestic inflation which has got badly out of control. The money supply increased last month at an annual rate of 24 per cent. When we add to these internal factors the creeping deflation of the pound, which has lost 15 to 25 per cent. of its value against other major currencies in the last two years, we have an even more serious fact. The imports of raw materials and food which we need have cost so much more as a result. This effect combined with the general rise in world commodity prices has meant a massive imported inflation to add to our already serious domestic inflation.
No wonder that people's confidence in the value of money has eroded fast, particularly since the United Kingdom has suffered the highest increase in consumer prices of any industrial country in the past three years.

Mr. Nicholas Ridley: Is the hon. Gentleman aware that many economists believe that we have exported about 3 per cent. annual inflation which otherwise would have rested upon us here and that we have not imported any at all?

Mr. Stonehouse: I do not believe that is borne out by the figures in the Prime Minister's speech this afternoon and by available facts. The world commodity price increase has meant that there has been a direct inflationary effect on our economy. To argue that we have exported inflation is nonsensical when judged against the facts. The Government must stop trying to ride too many horses at the same time. They must stop acting as if we were on the


brink of an export-led boom when industry cannot meet orders because of labour and component shortgages and when domestic inflation is sucking in imports because our manufacturers cannot supply home demand.
The Government must stop acting as though the price control system they have invented is effective because it is not. There are too many loopholes. Some builders are buying United Kingdom supplies exported to France and then imported to avoid the price control system which is preventing individual suppliers from selling to them direct at a profit. The Government must stop talking blandly as though they were already fighting the next election and start telling the people some of the realities. At least the Minister of Agriculture set an example on Friday when he admitted that food prices, even after the disastrous rises in the past 12 months, will still have to go upwards. It is the reality that the rise in oil prices already announced will add £450 million to £500 million to the import bill across the exchanges next year while the actual increases may be much higher. The rise in raw material commodity prices during the past year has meant an extra £1,000 million on costs. These are massive amounts, made even worse because of creeping devaluation. They wipe out the value of our increased exports. Exports have to be of a much greater volume to make up for the devaluation.
The high interest costs of persuading hot money to come into Britain so as to hold up the pound exchange rate is also a heavy burden on the economy, quite part from the appalling effect of the 13 per cent. MLR rate on domestic costs. This manipulation of the exchange value of the pound makes nonsense of the policy of floating.
At one time there might have been some value in floating. Now it gives us the worst of all situations. The Bank of England still intervenes to prevent the pound's downward trend, the public sector is encouraged to borrow large sums abroad thus creating hostages for the future and we have to impose on ourselves the highest official interest rate in Europe to persuade the multi-nationals and the Middle East holders of sterling to keep their money here.
With all these manipulations it would make more sense to discard floating and adopt a fixed rate. Since sterling is undervalued against the dollar and some European currencies it would be wisest to up-value the pound by 5 per cent. to 7 per cent. forthwith and to serve notice on our partners that our defences will be used to protect this realistic rate at which our exports would still be competitive. This action would also save on our import bill.
To make it effective it will be necessary to impose, for a short period, controls on the import of certain consumer goods. Other industrial countries are also suffering seriously from inflation. That should help our export performance. We might also benefit from a down-turn next year in raw material and commodity prices. But we cannot rely on external factors changing to our advantage. The real solution to our economic problems must be found within Britain.
I see the following as being some of the priorities. First, there must be a fuel policy. Here agree with my hon. Friend the Member for Dearne Valley (Mr. Edwin Wainwright) who made this point. There should be a fuel policy, with renewed emphasis on increasing indigenous coal production, developing nuclear power and accelerating the offshore gas programme. Secondly, we must transfer as much transport as possible from road to rail. Here I thought that the hon. Member for Stratford-on-Avon was right on the ball because this is a way to save expensive imported oil and to avoid costly road building programmes.
Thirdly, we must have a policy with the appropriate incentives to increase productivity in those sections of our industry where our performance is only one-third to two-thirds of that achieved in the United States, Sweden or Germany. Even a 10 per cent. improvement would help a great deal while a 20 per cent. improvement in these sections of industry alone would work wonders for our economy.
Fourthly, there should be temporary import controls on the lines I have outlined. Fifthly, to prevent the effect of the high interest rate, which I hope is only temporary, having a deleterious influence on personal buying of houses and on the municipal house purchase and building


programmes there should be direct assistance to individual house buyers and municipalities in the form of subsidised interest rates to protect this important section of the social services.
Although we have an undercurrent of gloom in this debate the long term future for the country can be good. In four or five years' time we shall begin to get the benefit of the gas and oil from the North Sea. It will begin to produce an extra value to us in terms of import-saving amounting to about £500 million to £600 million a year. That will rise and in about 10 or 12 years we might become a net exporter of oil. This will have a dramatic effect upon our economy which is now so vulnerable as an importer of fuel.
Our future can be good but to make it so we have to face up to the realities now and stop kidding the people that it will be jam tomorrow because it will not be so. We face the serious danger that if world commodity prices do not reduce during the next year our standards might not rise at all. At this time we are particularly vulnerable to these world price fluctuations. I hope that the Government will begin to follow the example of the Minister of Agriculture and be more honest in their dealings with the people, because they respect honesty and straight dealing more than anything else.

7.58 p.m.

Mr. Peter Horden: I agree with the right hon. Member for Wednesbury (Mr. Stonehouse) in some respects and certainly in the time and attention he devoted to the impact upon the economy of the price increases brought about by rises in commodity and raw material prices. That was one factor which seemed to be totally absent from the speech made by the Leader of the Opposition.
It could be said in a back-handed way that his censure motion, mounted by the Leader of the Opposition, was a large tribute to my right hon. and hon. Friends on the Front Bench. The right hon. Gentleman seemed to ascribe to them an ability to control prices of food, raw materials and commodities as if everything could be controlled from White hall and all that was needed was one big leap by the Leader of the Opposition into Downing Street and all would be well.
The House and the people recognise that the position is very different. I agree with the right hon. Member for Wednesbury that we now face an extremely critical position. I believe that the people should be told, and, as the right hon. Gentleman said, my right hon. Friend the Minister of Agriculture, Fisheries and Food has told them in just those terms. We are in a particularly crucial position in terms of the price of oil. I speak as a director of a subsidiary of an oil company. Even if the war in the Middle East had not broken out, I believe that the increase in the price of oil would have occurred very soon, even though it might have been delayed for a few months.
I have two reasons for taking that view. In the first place the Arabs and the Middle Eastern countries as a whole are becoming much more knowledgeable about the value of their resources. The OECD has calculated that if the present rate of consumption continues, the supply of oil in the Middle East will steadily decline after 1985. The Arabs are well advised and they know this to be true. They know that their main resource is being purchased in currencies which lose their value year after year.
The second reason is that oil as a commodity and as a competitive fuel is still very cheap as a comparative fuel. The Arabs can clearly see the amount of revenue raised by this country and by many other countries from fuel. They say to themselves "If this can be done by those countries and if their Governments can benefit by that revenue, then so can we in putting up the price". Therefore the likelihood in the short and medium term is that the price of oil will continue to rise, and we must recognise this factor. We shall be in a critical position for some years ahead until we begin to gain supplies from the North Sea. Our position then can be changed dramatically compared with the fortunes of other countries.
In this debate we are concerned with the present position. There is a considerable gap between the time when we shall be getting oil supplies from the North Sea and the present situation in which we have to import so much of this commodity. I understand that the cost of importing oil this year will be £1,800


million against £914 million last year. For copper the cost will be £453 million against £207 million, and for wheat £392 million against £124 million. Those and other items have caused the terms of trade to deteriorate very rapidly during the last year. They have deteriorated by 18 per cent. since a year ago, and the deterioration in the last three months, in the last month in particular, has quickened considerably. What is more, these increases in raw material and commodity prices have still to make their major impact on the retail price index. They will not be felt for three months to come.
I do not think we should delude ourselves that the problem is short term, because the likelihood is that in the next three months we shall see prices rise as fast as they have risen so far, and per haps even faster. We should recognise that in some commodities—copper, zinc and tin—they are now at their highest level ever. All commodities have to be purchased by our industrialists and translated into exports.
I do not regard these as matters for censure. They are facts of life which have to be dealt with and which cannot be dealt with by running away. Let me say this to my right hon. and hon. Friends about the prospects of an export-led boom. It is true that in the sense of the volume of our exports we are doing well, but we must recognise the impact of raw material and commodity prices and this has hit all the other Western European countries. It has not hit the United States quite so hard, but Japan has been very hard hit indeed. If we look at export prospects, the likelihood is that the rate of growth in demand caused by the increase in world trade is likely to slow down next year. We must consider what this means to us since we are so dependent on exports.
I do not agree with my hon. Friend the Member for The Wrekin (Dr. Trafford) who said that interest rates appear to be going down. From my observations it appears that interest rates are rising. They are high in the United States, as they are also high in West Germany and in France. In all those countries and also in Japan the trend is towards higher interest rates and for a damping down of the various economies.
It is not right for us to be too hopeful or optimistic about an improvement in our exports in the coming year. There is no other country that is attempting to cover an increase in exports while running a Budget deficit of the size we have in this country. In many respects the Government have achieved considerable progress. It is an achievement to have restricted the increase in the cost of living to less than 10 per cent. in one year. But I do not think that the policy of phase 3 and the Price Commission can be maintained without causing some danger to investment and without damage and distortion to trade and industry.
Prices have been kept down by the nationalised industries and we are shortly to have a Bill to increase the subsidy to £500 million. We must look carefully at the impact which extra borrowing costs will entail. Where the policy has not been successful—I find it a little curious that we should take such credit for this—is in the fact that incomes and earnings have risen by 15 per cent. It seems to me that in conditions of labour shortage earnings will rise even faster now despite phase 3. I regard it as a euphemistic policy to believe that firms will not poach labour when those firms have large order books, many of which are export orders and where severe penalties are attached if those orders are not carried out.
I shall not bother the House with my views on the effect of money supply since I have done so on many occasions every year over the last 10 years, but my feeling about the importance of money supply is unchanged and undiminished. I merely wish to point out that it has a considerable lag effect. To increase the money supply by the amount it has been increased in recent months is, to my mind, a source of potential and certain inflation. This, therefore, is an important time at which to cut back demand. I hope that the measures and action announced last week will be sufficient to do this. Many of us, for at least six months and some of us for even longer, have urged a reduction of the rate of increase in public expenditure. I do not know whether it is possible to cut public expenditure now or in what respect, but I suggest that something could be done about public expenditure by local authorities.

Mr. E. Fernyhough: Why not cut defence spending?

Mr. Hordern: I do not follow the right hon. Member for Jarrow (Mr. Fernyhough) in the matter of defence. We have to deal with the consequences of the Budget deficit.

Mr. Charles Loughlin: Which local authority expenditure does the hon. Gentleman suggest we should cut?

Mr. Hordern: I shall come to that. It is argued that a cutback may endanger growth. I do not believe that this will happen. Industry has full order books and a growth rate of 3½ per cent. will be successfully carried out at least at this rate always provided that there is sufficient capacity both in men and materials.
I hope that some public expenditure can be carefully reconsidered. The sort of local authority public expenditure that I have in mind—I contrast this with the difficulties which we shall experience in matching the deficit—covers such things as sports halls, town halls and swimming pools, the sort of construction in respect of which authority has been given some months past by the central Government. Such expenditure looks very strange in deed when compared with what is involved in covering the deficit.
I now come to the question of the Budget deficit. Nobody knows how large this deficit is. I am sure my right hon. Friend is correct in saying that there is no precedent for revealing the size of the Budget deficit. I believe that the prospects for covering this deficit are better than people seem to assume. In the first place we must have a considerable increase in revenue, if for no other reason than because of the increase in inflation and constant levels of taxation. By January the revenue position should be quite good. It is also likely that it will not be possible to carry out a great deal of Government expenditure which was authorised for this year, not because it was not meant to be carried out but because the strain on public services, works and contracting is such that it will not be possible to get through the work in time.
If this is the position, it would be of great benefit for the Government to say exactly what is the borrowing require-

ment. This would help their funding programme in the gilt-edged market. We are going through times which are certainly uncharted, so far as our experience of high interest rates is concerned. We do not have any experience of the impact of these high interest rates. The House has often mentioned the impact on young couples and those with existing mortgages. I should like to refer to one other sector of society, that to which my hon. Friend the Member for Stratford-on Avon (Mr. Maude) referred. I have in mind those in receipt of the old-age pension and with some savings income for which they have saved all their lives.
Many people hold 3½ per cent. War Loan. That is the most commonly held Government stock in existence today. That stock has declined in the last 18 months from 41 to 29; in other words, there has been a reduction in money terms of some 25 per cent. The cost of high interest rates, which is brought about by the need for the Government to cover their Budget deficit, is felt very much by those elderly people who have saved all their lives and who have had a reduction in the purchasing value of their income and a real loss in money terms in their savings. This is a very high price to pay for the kind of expansion upon which we are bent.
I am sure that the long-term economic future is very bright, but I urge my right hon. and hon. Friends to look carefully at the plans for expenditure to make sure that our plans for the following six months can be carried out successfully.

8.13 p.m.

Mr. Dick Douglas: It is not my intention to follow the hon. Member for Horsham (Mr. Hordern) in the full compass of his remarks. The House ought to accept that this debate is not about the long-term future prospects but about the economic management by the Government during their period of office. If what the hon. Gentleman says about the long-term future prospects is true—and I accept some of what he says—the current performance of this Government is more than condemned.
The Prime Minister seems to assume that he is in charge of the national bus, that when he took control of this bus the gears were deficient, it was incapable of accelerating, it did not have the proper


brakes, and that he, through the Government mechanism, was to undertake a whole series of repairs. Today the right hon. Gentleman gave no indication that anything foundamental had happened to repair the national bus. He is still driving this vehicle into an inflationary state and, on his own admission, the gears and the brakes are still deficient and the bus lacks proper acceleration. That is his view. I do not share that view. I do not condemn the basic resources of this nation. I condemn the Government's management of those resources.
The right hon. Gentleman having spoken in a debate on energy policy in July and having said that there was no energy crisis, I perceive that a few months later we are in the midst of an energy crisis which the hon. Member for Horsham suggested—and I agree with him—we should have anticipated. In February I said that the five-dollar barrel was a long way off, although I accepted that it was coming. People could see the OPEC countries doing all the things which Conservative Members said they would. They were doing the calculations and they saw that oil in the ground was much more valuable to them. They were perfecting their organisation in terms of a producer cartel. They were increasingly overturning the collective views of oil companies.
We ought now to look at the rêle of these multi-national oil companies as a buffer state between the consuming nations and the producing nations. The usefulness of the oil companies in this riffle is diminishing, and, in order to get an international oil policy, consuming nations of the world will shortly have to find some form of international co-operation to get some sense in the long term in relating supply and demand of this important commodity.
I turn to the Government's management of our own indigenous fuel resources. I will not talk about North Sea oil because I have consumed the time of the House on that subject on many occasions. When we consider the miners we see we have a situation which is quite unique. It is true that my own Government—I was not in the House at the time—adopted a policy, through the Coal Board, of closing a large number of pits,

with the result that many men left the industry. At the present time men are leaving the industry not because of pit closures but because of higher remuneration and better conditions elsewhere, and they are doing this at an appallingly high rate which the nation cannot afford. To adjust the balance, some interventionist policy is necessary for the national well being.
Not many Labour Members are overwhelmed at the idea of a prices and incomes policy, but I say that, in order to have an interventionist policy to adjust the balance for the miners, a comprehensive prices and incomes policy is required. If we are to have some national job evaluation, some conception of the social value of an occupation must be written in. I think my right hon. Friend the Leader of the Opposition is a sponsor of this idea, and I would accept the idea of a permanent commission for job evaluation. In that situation we have to say clearly, in social cost-benefit analysis terms, that the nation requires the coal. Nobody but the miners can get the coal, although we have masses of machinery in the pits. Therefore, we must pay to retain a viable mining labour force. There does not seem to be any long-term or, indeed, short-term alternative.
The annual confrontation between the miners, the National Coal Board and the Government should be removed. It is out of keeping with the needs of the nation in the last quarter of the twentieth century. It might have been in keeping with the last quarter of the nineteenth century, but it is no longer relevant. If the Government are sincere in saying that we need the miners they should say to the National Coal Board, "Let us not only adjust the offer, but give these men the prospect of long-term future employment in this industry." That is what is required. The miners do not want a year-to-year existence but a long-term contract of employment. That is what we should be negotiating for this and other industries where labour is scarce and necessary on a social cost-benefit analysis basis.
Some hon. Members have accused the Government of gambling with the economy. Indeed, they have gambled with the economy since taking office. It is all very well to say that it is most difficult to forecast the future, but this


Government were elected on the prospect of economic expansion and on giving the people a rising level of expectation that they knew quite well at that time could not be fulfilled.
The electorate seem a little confused. When we were in Government we persuaded the electorate that deficits or surpluses in the balance of payments were important. It now appears that the Government take the view that deficits in our balance of payments are quite unimportant. We know better. Deficits in our balance of payments indicate our in debtedness to the rest of the world. Even on the basis of good national housekeeping, the Government have been profligate with the nation's resources.
I am surprised that in the remarks that have emanated from the Treasury Bench today nothing has been said about the effect on the stability of the international monetary situation of continuing to have floating currencies. I am not a floating currency man. I recognise the instability that that produces in the international monetary mechanism. If we are to have instability in the international monetary system and perhaps in international trade no country stands to suffer more than Britain. The long term prospects for trade are not so optimistic as the Government have suggested. The long-term prospects are that international trade terms will continue to move against us. Therefore, the Government are all the time gambling with our future.
When the Labour Government left office there was a balance of payments credit of about £20 for every man, woman and child in the country. Now there is a deficit round our necks of about the same amount. That is what economic management under the Tories means.
The Prime Minister said that he spoke for all the nation. That is a fallacy. The great challenge, despite the recent by-elections, is to our democratic process. Up to this time people have still sought a solution at the ballot box. If the Prime Minister goes on as he has been going on and Conservative Members continue to vote to stabilise this profligate Government people may not choose the ballot box the next time.

8.25 p.m.

Mr. David Knox: The hon. Member for East Stirlingshire (Mr. Douglas) made an interesting suggestion about a national job evaluation scheme. This has a strong appeal to me. At the same time, he criticised others for raising expectations. I have had experience of practising a job evaluation system within one firm. We could not evolve a system that would apply to all employees in that firm. If we are to pursue this idea of a national scheme—I agree that we—should—a great deal of work and a long time will separate the original decision to start the research on it and coming forward with a reasonable scheme. In saying "a long time" I am not talking of 12 months or two years, but perhaps 15 or 20 years.
The hon. Gentleman blamed the Government for raising the expectations of the British people. I take issue with him on that score. This exaggerates the power of the Government. We live in a world of rising expectations. In recent years the British people have seen people in other countries doing better than themselves. Therefore, their expectations have risen as a result of that as much as of anything else.
We are discussing the Government's management of the economy. It is now about 2½ years since the Government embarked on the strategy of economic expansion. Despite what has been said by hon. Members on both sides of the House, that policy has achieved fairly considerable success. We have achieved a growth rate of 5 per cent. Industry in Britain is booming. Order books are much fuller than 2½ years ago, or, indeed, in 1970. The living standards of our people have gone up more quickly during the last 2½ years than at any time under the Labour Government. Unemployment has been halved in the last two years. Exports have risen considerably in both volume and value and are more competitive than at any time since the end of the war.
It is as well to put that side of the situation, because there have been many successes.
At the same time there are difficulties. It was obvious to most people that this autumn and winter were likely to be the


crucial time in determining whether Britain would achieve a high and sustained rate of economic growth. It depends largely on how the Government react to the current situation whether this growth will be achieved.
I welcome the calm nerves shown by my right hon. Friends the Prime Minister and the Chancellor of the Exchequer thus far. I am not surprised, because my right hon. Friend the Prime Minister recognised that this autumn and winter would be the crucial time for this country. He recognised the difficulties which would confront us when he said at the beginning of September:
Time after time Governments have tried to expand and, when we have got to the point where we are now, they have lost their nerve and the timorous voices have prevailed, and they have drawn back. This time there is no going back.
I certainly hope that there will be no going back on the policy of sustained economic growth this time.
I felt that the Sunday Times leader yesterday summed up well when it talked about our economic position as
fundamentally good prospects among some bad intervening factors.
There is no need for panic. There is no crisis at the moment. There are, however, some bad intervening factors. In particular, I refer to the industrial situation and our balance of payments. These are the two factors that have led to the debate today. Of these two, the industrial situation is immeasurably the more important. But in general, industrial strife is not eased by acrimonious debates in the House. I wish to say nothing that makes the resolution of current disputes more difficult. I want to express the hope that common sense on the part of all the participants will prevail and that the current difficulties will soon be overcome.
I should like, however, to say rather more about the balance of payments. I think that it is obvious to most hon. Members that the reasons for the particularly bad figures in October were two fold: first, because much of October's imports were bought at the prices prevailing in August, when the world commodity price boom was at its peak, and, secondly, because we had felt in October the first effects of the increase in crude oil prices on our domestic economy.
I find, however, that the reactions of the City of London and elsewhere to this balance-of-payments position are quite remarkable. First, although the size of the deficit was undoubtedly larger than anyone anticipated, a severe deterioration was likely in October. Secondly, it has always been wrong to over-react to one month's trade figures. The hon. Member for East Stirlingshire (Mr. Douglas) may laugh, but this applies as much to good figures as it does to bad figures. It is a great mistake to over-react to one month's trade figures.
The third reason why the reaction was remarkable is that it seems that although these figures are likely to be bad for a month or two longer, the reaction suggests very short memories of what hap pens when the pound is devalued, as it certainly has been since it was floated 18 months ago.
After the pound was devalued in November 1967, we did not move back into surplus until between the first and second quarters of 1969. There was a time lag of about 18 months between devaluation and moving back into surplus. Initially, after the devaluation the balance-of-payments position worsened. Throughout 1968 there was a great deal of talk in Britain about devaluation not having worked. All sorts of clever excuses were advanced about elasticity of demand for imports and exports, and so on. But it came right in 1969, and magnificently right in 1970 and 1971.
Today is getting on for 18 months since the Chancellor floated the pound. Since the float, the pound has been devalued. In precisely the same circumstances as those pertaining in 1967–69, one could have expected that the balance-of-payments situation would have righted itself; but there have been certain important differences this time, which may delay this but will certainly not stop it eventually happening.
First, this time the pound floated down. In 1967 it was devalued from one fixed rate to another. One would expect, therefore, that the effects would take rather longer. Secondly, we have had the effects of the world commodity price and food price boom. This has been greatly to Britain's disadvantage because we import half of our foodstuffs and almost all of our raw materials. Indeed, it is estimated


by the Economist this week that but for the increase in our import prices, up until September, at least, Britain would have been in small surplus this year. So the effect of the rise in world commodity prices and food prices is something which explains why the devaluation of the pound has not worked this time as quickly as it did on the last occasion.
The third reason why the balance-of-payments position has not righted itself yet is that commodity prices peaked in August and we had the effect on the October import bill at just the same time that we had the initial effects of the Middle East crisis through the unfortunate increase in oil prices. Thus, though at present commodity prices have started to fall, the effect is likely to be offset for a considerable time by the increase in oil prices.

Mr. Ridley: Will my hon. Friend give way?

Mr. Knox: I am pressed for time. The hon. Member for Ealing, North (Mr. Molloy) has just given me the sign of the clock.
Although commodity prices have started to fall, the effect of this will be offset over the next month or two by the rise in oil prices, and the improvement which it was legitimate to anticipate will be somewhat delayed. Nevertheless, eventually the balance of payments will right itself. When it does, it will probably do so to an embarrassing extent because, as it improves, so will the value of the floating pound rise, and that will tend to accentuate the improvement.
Concerning exports, at present there are, as some hon. Members have mentioned, two great advantages which we now enjoy but which we did not enjoy in 1967–69. These are, first, that British exports are today much more competitive than they were then, even after devaluation. Second, because of the workings of the prices and incomes policy, there is no profit control on exports. Exporters, and those who have not exported so far, thus have a much greater incentive to export than they had before.

Mr. Neil McBride: rose

Mr. Knox: I will not give way to anyone, because I am pressed for time.
There is no long-term reason to be excessively pessimistic about the balance of payments, given strong nerves by my right hon. Friends the Chancellor and the Prime Minister. I believe that this country, continuing on its present course and not taking further measures than those taken last week, can eventually move into a stronger balance of payments position. That is the point my right hon. Friend the Prime Minister made in the speech from which I quoted earlier. Strong nerves are required. If the Government keep their nerve they can see the situation through and Britain can continue the growth she has experienced these past two years.

8.35 p.m.

Mr. William Molloy: I hope that the hon. Member for Leek (Mr. Knox) will forgive me if I do not take up the points he made. He and the Prime Minister are the only two people in the country who do not believe that we have a serious crisis.
The Press has been making its contributions to the discussion of our situation, particularly the Sunday newspapers and the weekend magazines. Many of them have all sorts of solutions to propose, and it is right and proper that responsible newspapers should not merely comment but should let us have the benefit of their views on what should be done. If they suggest varying solutions to put matters right, it is simple to deduce that there must be something wrong. Therefore, the House must examine the situation seriously.
The Guardian today said that
Censure debates tend to be rowdy, braying, theatrical affairs and today's in the Commons will probably run true to form.
Later on, that editorial rightly talked of the present agony in Greece, and I applaud The Guardian for that. Perhaps on reflection whoever wrote that editorial will not mind a bit of a theatrical performance in any Parliament so long as it remains free and democratic rather than have the bestial savagery that is going on in Greece.
We are debating whether the country is in a serious situation and whether it was right for the Opposition to seek to censure the Government, putting down


a motion of no confidence. We must examine the facts, which have been explained by various speakers. The most important questions are the following. First, is it right to say that the present Tory Government are inefficient because we have had the sharpest rise in food prices for 20 years? Let us go a little further. The price of bread, the basic foodstuff which is being eaten much more now to fill people up because of increases in the price of other foods, has risen twice in the past six months. That has never happened before in our history That is not a bad point either.
Then we learn from someone in the meat trade who can get a rise of £317 a week that he is very much concerned that the British people are not eating much beef or other meat. The fact is that a great deal of meat is now out of the range of millions of ordinary families. That is not a bad point either on which to base a motion of no confidence in the present administration.

Mr. McBride: Three or four weeks ago the Chancellor of the Exchequer said that to put back the price position to what it was a year previously would cost £1,400 million. How many more millions of pounds have now gone on the house wife's bill as a result of the Government's maladministration?

Mr. Molloy: The Minister of Agriculture, Fisheries and Food was honest enough to say, or perhaps it came out by accident, that food will get much dearer, but it would be unfair to support a motion of the kind before the House by speaking of what might happen. I have described what has already happened, and I have not yet finished my list.
We are told that world prices put up the cost of food and the cost of wheat and bread, but what kind of cement is used in council houses? Is it made of wheat or rye, which means that council rents have to be increased? What kind of weather conditions lead to rent increases for millions of council house tenants? We are left to consider the hypocrisy of the Government. When it suits their purpose they blame all sorts of things but they cannot escape responsibility for having deliberately robbed town halls of their democracy and ordered

them to put up the rents of council houses.
For ordinary people, and young couples especially, the ideal of getting a mortgage to buy their own home is out of the question. We are living in Great Britain in 1973, but it is almost impossible for young couples to attain their ideal of owning their own homes. That is another good reason for censuring the Government.
We were told that last month there was a record trade deficit of more than £300 million. When one points out such facts at Question Time or in debates and says that the situation is frightening, the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry do not seem to care.
The Prime Minister revealed this afternoon—it was probably a reasonable excuse—that he did not really understand the offer that was being made to the miners. He could not understand that the top percentage increase was to go to only a small minority of men. After a while it dawned on the right hon. Gentleman what was happening, and that is part of the agony of dealing with the present administration. To get an idea into their heads sometimes requires almost a surgical operation. Rising prices, mortgages beyond the reach of young couples, increases in council house rents and an unemployment figure at one time of 1 million all mark the Government's achievements. They are the only Government in the world who could have done all that without a Watergate.
During the 1929 crisis I was a small child in a South Wales valley. I remember the bitterness of the occasion. It was created by massive unemployment, but one saving grace was that prices dropped a little. The major issue today which makes ordinary people irritable, nasty and frustrated is that of prices.
The Labour Government failed adequately to control prices, and that was why they lost the election. The glib promises made by the Prime Minister during the election campaign resulted in there being more Tories on the benches opposite than there are Socialists on this side of the House. People will remember that campaign and what was said. Many of us now in opposition did our best to


get our Government to understand what it meant for ordinary people to experience considerable rises in prices and not be able to pay the grocer and the rent man without asking their husbands to get a few more bob a week via the union, and if that was what they did, that too was said to be wrong.
The Labour Government committed similar crimes, but not of such astronomical proportions, and they never made the kind of glib promises made by the Prime Minister. Never before has there been such a dramatic increase in prices as has been experienced under this administration.
Developers alone have made profits of £800 million. How can one expect shop workers, nurses, midwives and teachers to put up with increases in price and rising mortgage interest rates and accept that they must not ask for a couple more bob a week because there is not enough for them, the developers having got it all? How are people expected to swallow that sort of muck? Yet it is what the Prime Minister expects of them.
This afternoon the Prime Minister spoke of the nation's need to produce more and to send exports soaring. In my constituency there is the firm of Rock-ware Glass—we are to have it for a couple more weeks—which is in the glass container industry, making milk bottles and medicine bottles and so on. It was so threatened by the Slater Walker organisation, the asset-stripping boys, that it caved in and stripped down its organisation. I understand that the plant is to be sent to Western Germany, where all the glassware will be made, while the present site of Rockware will be where the containers are stored. That is a nice way for Britain to get on. This is the behaviour of those without loyalty to party or nation, with loyalty only to their bank balances.
Yet the people engaged in such activities and some of their underlings received no less than £300 million in tax relief in the 1973 budget when the Chancellor handed that sum to all those earning £5,000 a year and more. The Government make a grave mistake if they think that ordinary people in their ordinary homes do not understand this.
It is not unreasonable to say that, having made these criticisms, and they are not difficult to make, having explained

why there is no confidence in the extinct volcanoes who are now absent but who ought to be on the Government Front Bench—

Mr. Arthur Lewis: They are all at Strasbourg.

Mr. Molloy: If the British coal miners indulged in the same level of absenteeism as the Government Front Bench during this debate, we would have a serious crisis.

Miss J. M. Quennell: I draw the hon. Member's attention to the total absence of one entire party.

Mr. Molloy: I am glad that the hon. Lady has drawn my attention to that. The Tories are responsible and inefficient; the Liberals are irresponsible and inefficient; they could not care less.
One Liberal is constantly telling the nation on television what an awful place the House of Commons is and how in efficient it is. I do not know where the hon. Member for Rochdale (Mr. Cyril Smith) gets his information. He must have his own secret spy hole to find out what is going on. He is famous for not appearing in the House of Commons but for being well-fed for appearing on television and telling the nation what a terrible place this is.
But that is the ideal of the Liberal Party. The Liberals are as guilty as the Tories, because in the past couple of years there has not been a great issue when they have not trooped into the Tory Lobby; and when one of them did not intend to do so, he did it by accident. He is not here tonight; he is looking for his dog.
Yesterday the Observer said that the Labour Party had no alternative policy. That is dishonest. What the Observer was saying was "We know that you have an alternative policy but we do not like it and so we say that you do not have an alternative policy" We spelt it out clearly at Blackpool. The Observer said that the Labour Party had only a collectivist solution
Britain has not done too badly by the collectivist ideal. It has been used to combat illness, pain and suffering and to help working-class families who could not otherwise have afforded the doctor to get medical treatment—in other words, the National Health Service. Hon.


Members probably realise that 98 per cent. of Britain's children are educated on the basis of a collectivist ideal. Law and order—the courts and the police—are administered according to a collectivist ideal. The roads and rail transport are provided for in the main on a collectivist ideal. Forty per cent. of our nation is housed by local authorities which provide council houses, and that is not a bad collectivist achievement. Therefore, when the Labour Party says that it will expand the collectivist principle, the principle upon which our health service and educational system are based, I am all for it.
A practice has crept into the debate which I wish to encourage. Back-bench revolts have often been known in the Labour Party in the past, and at one time it could be said that the only places where total unanimity could be found were in the graveyard or the Tory Party. That is no longer true. I understand that there was a revolt on the Tory back benches last week and I should like to see the practice carried further. However, instead of having Tory back-bench revolts when the Conservatives are in power and Labour back-bench revolts when my party are in government, we should devise a system in which hon. Members, irrespective of party, if they feel that a sharp reminder should be given to the Government to stop maladministration, could get together and deliver it.
I do not expect the Conservatives to accept the policies outlined by my party, but in our judgment they are the sort of policies required to put the country back on an even keel. However, we must keep a careful eye on any cutting back of public expenditure. We have heard a variety of suggestions but one of the most damaging things would be to cut back public expenditure in education. In my judgment, it would be a heinous crime to eat the seed corn. I hope that the Cabinet, drunk with failure as it is, will not consider moving in that direction.
The Prime Minister is obsessed with 1984 language, in which failure is success. If he would try to explain to the people that things were going badly, if they thought the Government were endeavouring to be socially just and fair the people would respond in the way they have

always responded in an emergency. Therefore I say to my hon. Friends as well as to the Government that the central theme of any policy must be to show the British people that we do not regard them as fools, that they matter and that all policies are as nearly as possible designed to be fair and just. Then will come a response which will lift the gloom which surrounds the nation. If the Government are not prepared to do that or are incapable of it, they should make their great contribution by resigning.

8.55 p.m.

Mr. Nicholas Ridley: I hope that the hon. Member for Ealing, North (Mr. Molloy) will forgive me if I do not take up the matters which he raised. I wish to analyse briefly where the Government's policy of growth at any price has taken us.
It has taken us, in the last two Budgets, to deficits totalling £7,280 million. It may or may not be less. We would like to know. When we take into account what has been sold to the non-banking public in gilts, there must be between £4,000 million and £5,000 million which has been financed in an inflationary way. That has caused us to increase the money supply during the past 18 months by 20 per cent. or 30 per cent. When my right hon. Friend the Chancellor of the Exchequer went to the Brussels meeting of the European Finance Ministers he was told that a 4 per cent. increase of the money supply was all that could he afforded if inflation was to be avoided.
On the overseas account in over the past 18 months we have turned a surplus of £400 million into a deficit of £1,200 million—that is a turnover of £1,600 million. That is covered by borrowing in currencies will are appreciating against us. We are doing so to stock up with Japanese television sets and Mercedes-Benz motor cars. They are not, in my opinion, essential to our industrial recovery.
The economy at home is overheating. We have a 10 per cent. rate of inflation which is getting worse. We have a 13 per cent. rate of interest. We are short of labour and materials of all sorts. Goods required for the home market are exported because of the higher prices reigning on the Continent, and then the


same goods are bought back at an even greater margin to supply the home demand. We have twice said to would-be buyers of gilt-edged stock, "Buy our stock and it will appreciate." We have then put up the interest rate and the value of their savings has been slashed. We are now attempting to do so a third time.
We have tried to contain the situation with the corset of statutory control of prices and incomes. It is bulging in all the wrong places and squeezing in all the wrong places. It is squeezing profits, and wages are bulging out in such a way as to lose us exports we cannot afford to lose. The result is that we have reached a position where we are going for growth in our standard of living at almost any price. Of course, we can grow when we are net up to capacity, but now we have reached the full capacity of our industrial potential. We cannot grow faster than investment provides us with plant and equipment and with the availability of men and materials.
Further growth in the economy can be achieved only at a very much slower rate. To seek to continue to achieve growth through the injection of money into the economy will only make a serious position deteriorate quickly and more difficult still. It may be, as many hon. Members have said, that the terms of trade have turned disastrously against us—for example, the increase in commodity prices. That is so, and oil prices will follow. Surely, the logical conclusion is that we cannot institutionalise a rate of growth in our standard of living through phase 1, phase 2, phase 3 or any other phase.
We have reached the point where we must recognise that all the political promises that we make depend upon the realities of the world outside. This House must be responsible to the people. It must not promise them everything they want, whether it be more wages, more schools, a higher standard of living or—that great compendium of all promises—faster growth. Growth is not what Governments say. Growth is not what Treasuries plan. Growth cannot be encoded in stage 3. Growth depends on our position in the world and upon the efforts and investments of our people. Till we as politicians seize the reality of the situation and tell the people of

this country that we will not promise them what we cannot give, that we can not for ever be seeking votes, seeking to win the next general election by promising things far beyond our competence or the opportunities which may present themselves, we cannot cure our economic crisis.
Let us go back, therefore, to balancing the Government's books. Let us increase taxation and reduce expenditure. Let us reduce the standard of living, for this is now necessary if a deteriorating and difficult situation is not to become worse. We must not go on pretending to the people that we can do what we cannot do. The people will despise us. They will despise the political system which we pretend to operate. Till we in this House of Commons are prepared to put the country before the opinion polls, the by-elections, the next General Election and our own personal careers, the economic crisis which we have been toying with in today's debate will grow worse, not better.

9.2 p.m.

Mr. Denis Healey: The House—not, I fear, with a large enough attendance—has just heard a most impressive and moving speech from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), with much of which I agree, as I shall show.
I also agree with a good deal of what the Prime Minister said at the very beginning of his speech. The difference between the Government and the Opposition—and most of the Government's critics, I think, on their own benches—is not about the desirability of growth or, indeed, about what, in theory, is needed to achieve maximum growth. The difference is between those who believe in any sort of growth at any cost and those who believe that growth is of no benefit to the nation without stable prices.
The growth which we have enjoyed over the past 12 months has meant no increase in the real living standards of most of those who produced it. The trouble is that the Government have sought growth by methods which led to a catastrophic fall in the value of money both at home and abroad, and they seek to deal with the consequences of that by a machinery for controlling incomes which is both unfair and


unworkable and which itself militates against the very growth which the Government set as the main objective of their policy. As a result, the House and the country now face the greatest crisis we have faced in economic affairs for 40 years.
Although the Prime Minister defined the problem fairly, he gave us a fraudulent balance sheet. He failed completely to deal with the anxieties felt on both sides of the House above all about the balance of payments and the implications of the Budget deficit, anxieties which have been reflected in speech after speech from both sides and which were summarised brilliantly a minute ago by the hon. Member for Cirencester and Tewkesbury.
The Prime Minister spent far too little of his time on the fact that inflation over the past 12 months has been running at 9·9 per cent. on the retail index, or worse than the year before he introduced his freeze. It has been accelerating this whole time.
We have now had over 30,000 price increases since the last General Election. The Grocer magazine listed 549 price increases last week, and the situation is continually getting worse. The Ministry of Agriculture has told us that food will continue to rise in price. We have also heard of increases in wholesale prices in the last few days which will lead to a 12 per cent. retail price increase in 100 major products, and on top of this we have the effect of the £500 million increased cost of oil and an increase in steel prices of £140 million.
The Prime Minister had little to say about the balance of payments, although it is running at the moment at well over £1,000 million deficit and it is getting worse all the time—and that even before the £500 million increase in the cost of our foreign oil.
The Prime Minister said far too little about the fact that investment at the moment is appallingly low. The NEDC pointed out the other day that the share of the growth we have had during the current boom which has gone to capital is only one-third as high as the share which went to capital growth during the Maudling and Callaghan booms in the 1960s.

Mr. William Clark: What is your answer?

Mr. Healey: I am going to give you the answer in a moment. I beg your pardon, Mr. Speaker. I should have said, "the hon. Member". However, you shall enjoy the advantages of my reply as well as the hon. Gentleman.
The Government have just introduced a credit squeeze and a 13 per cent. Bank rate which are bound to have a dampening effect on investment intentions, which previously have always, in any case, very considerably overstated the investment actually carried out. On top of that, industry faces the risk of shut-downs as a result of the oil shortage, and we all know already—we have been told by all the building companies—that the pitifully low building programme to which the Government have committed themselves for next year may collapse entirely as a result of the credit squeeze and the increase in Bank rate.
These facts I have listed and which were dealt with in much more detail by my hon. Friend the Leader of the Opposition are essential elements in the balance which the Prime Minister pretended he was presenting honestly to us today.

Dame Irene Ward: So he was.

Mr. Healey: The right hon. Gentleman proclaimed that these facts are problems of success. I believe and the country believe that they are proofs of failure. In so far as the Prime Minister deigned to admit the existence of these facts, he attributed his appalling record entirely to external events which he claimed could neither be foreseen nor controlled. But if they were not foreseen when the Prime Minister constructed his policy, and if they were so important as to have distorted the results of his policy, why is there no attempt to adjust his policy to deal with them? We have had no explanation whatever from him about how he will adjust the policy for these major external events which he neither foresaw nor was able to control.
All of us know that the problems of economic management are not even fully understood in theory by the experts and are appallingly difficult to deal with in


practice. [Laughter.] Before hon. Members opposite go on sniggering at this fact, they should recall the long history of error in the short life of the present Government.
I think that we politicians sometimes do ourselves a disservice when we exaggerate the power of the Government to manage an economy such as the British economy, which is so vulnerable to external events.
Many hon. Members would forgive the Government for their mistakes if they faced those mistakes honestly. What we cannot forgive is the terrifying complacency shown by all Ministers concerned. The Prime Minister's complacency springs from an almost religious confidence in his view of the moment, a confidence which is impervious to all external influences until some obscure chemical change in his personality leads him to reverse it.
The Chancellor—well we are used to the cocky and combative irresponsibility which has characterised his management of the economy throughout—is the Simon Tappertit of the present Cabinet. As for the Secretary of State for Trade and Industry, he shows all the brassy and factitious enthusiasm of a second-hand car salesman or a shady tour operator who, when faced with the fact that the luxury hotel on the beach of the Costa Brava is in fact a half-built shanty five miles from the coast with the kitchen unfinished and the water not connected, exhibits a breathless excitement about the quality of the marble on the patio. [HON. MEMBERS: "Hear, hear."] If Tory Members who are now cheering so loudly had attended the debate earlier they would know that there has been almost unanimous agreement that there is something dangerously wrong with the economic strategy of the Government as it was introduced last year after the failure of their first economic strategy.
The Government have sought growth by a massive increase in spending and a big cut in taxation which has led to a boom in consumption and imports. We had a spurt in growth between the last quarter of 1972 and the first quarter of this year through taking up the slack created by a million unemployed, the product of the Mark I policy of the Government. Partly as a result of that we

got a once-for-all improvement in the use of manpower by industry. Now industry faces shortages of manpower and materials in critical areas.
Yet, as the Prime Minister rightly said, we have to find room in the coming year for investment and exports, room which has so far eluded us. Yet at this very moment when we need increased exports and increased investment the Government are not planning on increased growth. On the contrary, they have cut their growth target by half, to 3½ per cent. In the past six months actual growth has fallen well below this target. At the same time as the Government are planning on a substantial fall in the growth rate they have an enormous borrowing requirement of £4,000 million, swollen by public authority borrowing abroad of £1,000 million since March and, for example, by the subsidies to the nationalised industries which we shall he discussing on Wednesday.
Today's figures show that bank lending has been increasing over the past month at an annual rate of 54 per cent., that in the past four weeks £984 million extra was loaned to personal borrowers and industry. The domestic credit expansion seasonally adjusted, which was nearly £7,000 million last year, hardly fell in the first half of this year and is now rising again. There is increasing consensus on both sides of the House that this is a major reason for the fact that inflation is now roaring ahead worse than ever and the balance of payments is getting worse.
It is no good the Prime Minister trying to treat the balance of payments deficit as being simply a temporary inconvenience. It lies at the root of our present troubles. It has cost us the benefits of the growth we have enjoyed in the last year, and the means which the Government have chosen to meet it are increasing inflation.
The Prime Minister talked very proudly this afternoon of what he called domestically-generated inflation being comparatively low if one excluded the effect of import prices. But half the rise in import prices is due to devaluation—a devaluation which was adopted to meet the balance of payments deficit. The devaluation has been running at a rate of 17 to 20 per cent. That in itself is


responsible for about half the increase in the cost of living.

Mr. Norman Lamont (Kingston-upon-Thames): Will the right hon. Gentleman explain one matter? There has been a depreciation in sterling by 17 per cent. since the Smithsonian agreement in two years, and commodity prices have risen 70 per cent. in the last year. How can he maintain that half of the inflation through import prices is due to the depreciation of sterling?

Mr. Healey: With great respect to the hon. Gentleman, I must point out that the Price Commission has just reported that raw materials needed for industry have risen by 37 per cent. since devaluation, and half of that is accounted for by the devaluation of 17 to 20 per cent. What we and the country want to know is whether the Government plan to go on devaluing as the balance of payments gets still worse. If so, we shall never reap the benefit of the devaluation which has already occurred. We shall float like a brick and inflation will go on for ever. Or do the Government plan to meet the worsening balance of payments by a greater increase still in foreign borrowing? The Banker magazine points out this month that the Government's liabilities abroad have gone up by over £3,500 million between the end of 1970 and the middle of 1973.
We know that since March this year public authority borrowing abroad has been £1,000 on the Euro-currency market—a borrowing at three times the rate of interest required by the International Monetary Fund. This in itself adds £70 million of interest payments to the balance of payments deficit. Can the Chancellor of the Exchequer tell the House what President Pompidou said about these facts and figures in his talks with the Prime Minister this weekend?
The only other way the Government seek to deal with the balance of payments deficit is by increasing interest rates to a penal level. But do they plan to go on increasing interest rates to deal with their balance of payments deficit? The fact is that what the Government must do—and there has been an extraordinary degree of agreement between both Labour and Conservative back benchers today—is to act directly on the balance of payments deficit itself and

not to seek to deal with its consequences by these methods. In other words, they must reduce the balance of payments deficit by reducing the borrowing requirement and the excessive domestic demands which it has generated.
So far, all the Government have done is to demand a £600 million increase in special deposits from the banks. This will help provided that the Bank of England does not bail out the clearing banks by buying gilts as has been done so often in the past. I hope the Chancellor of the Exchequer will say what instruction he has given the Governor of the Bank of England in that respect.
It has also increased bank rates so that overdrafts for the less favoured borrowers go to 18 per cent. This is bound to have disastrous effects on investment, as can be seen from several letters in the business columns of The Times today.
The Government still hope that investment intentions will be turned into realities. All we have had so far towards reducing the balance of payments deficit has been one glimpse of sanity by the Chancellor of the Exchequer in a speech to American bankers' dinner last week. I quote from a Daily Telegraph report of that speech in which he pointed out that his measures add up to a tough credit squeeze. He then said:
But it would be quite wrong to draw the conclusion that this means an end to expansion. To the extent that some domestic demand may be reduced, there are ample export opportunities to take up the room created.
He is right, of course. We on this side of the House have been saying this for the last six months. One does not cut growth in Britain today by cutting domestic demand, because foreign demand is so high, the pound is undervalued and the competitiveness of our products is so extreme. The trouble is that we have not the products to export. Can the Chancellor deny that excessive demand is diverting potential exports and sucking in imports?
The Prime Minister insisted on talking about volume rather than value, and I will do the same. Last week's issue of the Department of Trade Gazette shows that in volume, exports of manufactured goods went up 4 per cent. since last October but that imports of manufactured goods in volume went up by 18 per cent.—more


than four times as high. I was told today in answer to a Question to the Department of Trade and Industry that imports of consumer durables had risen steadily from 4 per cent. of machinery imports in 1970 to 12 per cent. this year, and that imports of television receivers, which were worth under £2 million in the third quarter of 1970, were worth over £30 million in the third quarter of 1973—an increase of 15 times or 168 per cent. during the current year. The excessive demand in this country, diverting potential exports and sucking in imports, is a major reason for inflation and for the balance of payments deficit which the country now faces.
I should like to make some suggestions as to how the Government can reduce demand. First, the Government should withdraw the £500 million worth of tax concessions made to the rich over the last three years. Second, they should withdraw the tax-free interest on loans. Third, they should compel the banks to withdraw Access cards and all the other means of easy credit which are producing excessive demand and are not, in the main, welcomed by consumers. Fourth, they should withhold their £100 million of payment towards the Common Market budget this year, at least one-third of which is intended to subsidise butter to Soviet housewives. Fifth, they should introduce penal taxes on property speculators. Incidentally, the Prime Minister should sack the Leader of the House for the languid complacency which he showed on this matter in his interview yesterday on the radio.
The Government should drop their White Paper on Credit Control and introduce ceilings on bank lending in the personal and property sectors. If more is required to reduce demand, I suggest that the Government should introduce a special wholesale tax on consumer durables, a tax comparable with the tax which they have already introduced on motor cars, in addition to the value added tax. Meanwhile, since it will take some time for these measures to take effect, the Government must seriously consider some direct controls on imports. I believe that our partners both in the Common Market and elsewhere would be prepared to accept temporary import controls in Britain if they saw us taking measures

which were likely to get our balance of payments right in the longer run.
However, the Government also need to take measures to achieve what they have set as their major objective, to increase growth. The Prime Minister, in a part of his speech which wrongly bored most of his hon. Friends this afternoon, said quite rightly that Britain should not use the German approach to economic management of fiscal control in a free market because in Britain we needed to change the whole balance of the economy. The Prime Minister was quite right about that.
If the Government will not take our advice, may I suggest that they take two leaves from the French book. Since the war the French have faced problems very similar to our own in needing to change the whole balance of their economy. I suggest that the Government should intervene far more directly in business decisions as do the French Government in their programme contracts system. There is a good description of it in the Labour Party's "Programme for Britain", but the Prime Minister could get further information from President Pompidou.
There is one other area where the Government might take a leaf out of the French book, an area referred to by the President of the CBI in Birmingham last week, who was reported as saying that the Government should seriously consider maintaining legal control over prices, but rely on a voluntary policy for incomes. The report went on:
Before members recoiled in horror from this socialist nightmare he reminded them that France had lived with such a system for many years and had achieved steady growth at a rate far greater than in Britain.

Mr. J. Bruce-Gardyne: It does not work.

Dr. Trafford: What is the level of French inflation?

Mr. Healey: The Government have no intention of continuing legal controls over incomes after the end of stage 3. Recently the Secretary of State for Trade and Industry told us as much in response to an intervention by one of my hon. Friends. The present system does not work at all in half of industry. It does not work in firms which rely largely on


piecework. It does not work for the self-employed or for those on "the lump". Industries which are absolutely vital to the nation's future and to growth cannot get the labour that they require because of the restrictions of the incomes policy, whereas totally inessential industries are able to get labour because they are able to avoid or to evade the policy.
It is a shocking commentary on the present state of the prices and incomes policy that a miner can earn twice as much running a dump truck on a building site to produce an office building which will stand empty for 10 years because it pays the property speculator better to keep it that way.
I recognise that the policy that I have put forward will require sacrifices in living standards and freedoms by large sections of our community, but I believe that the British people know—nothing has brought it home more strongly than the events of last week—that they cannot live much longer in Never-Never land. The British people are always ready to make sacrifices when they are told the truth and when they know that the sacrifices will be fairly shared.
We condemn the Government, not just for their failures in economic management, but, even more, for taking refuge from their failures in a complacent evasion of reality and for treating as problems of success what are proofs of failure. We condemn them because they have widened the divisions in our society and because they tolerate and assist evasions of sacrifice by the wealthier members of our community. Until they give way to a Government who will base their economic policy on straight talking and fair dealing, there will be no comfort for our people.

9.29 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber): In order to put into perspective the action which was taken last Tuesday and to assess both the factors which led to it and the prospects which follow, I want first to consider the developments since the decision was taken last summer to float the pound.
The House will recall that, in the week before the announcement that we were no longer adhering to a régime of fixed margins around a parity, we lost 2,500 million

dollars of foreign exchange. On that Friday morning, when we announced the decision to float, we could instead have adopted the whole gamut of measures which had been adopted in times of previous pressure on sterling. We decided against the course because it was generally accepted, and it was certainly the view of the Government, that the economy was operating below capacity and we were not prepared to sacrifice the expansion which was then under way and which could be sustained because considerable slack was still available in the economy to be taken up.
It is fair to say that the decision to float the pound was almost universally welcomed, both in the House and outside it—and again this afternoon by the leader of the Liberal Party. Right hon. and hon. Members will recall, if they cast their minds back, that one of the principal causes of the lack of overseas confidence at that time was the belief that the level of pay settlements was excessive, and overseas holders of sterling pointed to one or two major settlements in particular at the beginning of last year which they believed had set a dangerous trend for the future. There was in those events, I believe, a salutary lesson which we should all heed. I shall return to that matter later.
If the House—both sides of it—and the country are to make a realistic and honest judgment about the present economic situation and the best means of dealing with it, the unprecedented rise in world prices has to be accepted as something which is right outside our control, out side the control of any British Government. During the economic debate a couple of weeks ago I gave the details, but the consequences can be summed tip in one simple fact, which seems to have escaped the right hon. Member for Leeds, East (Mr. Healey), that virtually the whole of the deterioration in the visible trade balance in the first nine months of this year can be accounted for by the rise in world prices.
To say, therefore, as the Opposition contend, that the deterioration in the visible trade balance is due to a failure of Government policy is total and absolute rubbish. According to the world commodity price index published by the Economist, the world price of commode-


ties has risen by no less than 94 per cent. since the beginning of last year, and the price of food in particular has risen by 69 per cent. No one who is attempting an honest appraisal of the causes of the escalation of world inflation can ignore these facts. Looking back to the beginning of last year, no one could have foreseen that this would happen. Now, much more recently—

Mr. Thorpe: The right hon. Gentleman has said that there must be an honest appraisal, but will he comment on the fact that some countries' currencies have depreciated as much as ours and, therefore, we have had to pay more, while some countries' currencies have appreciated and, therefore, they have had to pay less than we have paid?

Mr. Barber: I should have thought that that was self-evident. But that does not alter the point I was making: that virtually the whole of the deterioration in the visible trade balance in the first nine months of this year can be accounted for by the rise in world prices of commodities which are applicable to everyone throughout the world.

Mr. Peter Shore: In relation to that point, is the right hon. Gentleman aware that during the first nine months of this year, as compared with the same period last year, our trade balance with Western Europe has deteriorated by £600 million? That is not world prices and trade; that is European prices and trade.

Mr. Barber: I have given way two or three times, but I will answer the right hon. Gentleman. [HON. MEMBERS: "Answer."] All right. The deterioration in the visible trade balance during the first nine months of this year—if the right hon. Gentleman wants the details—is about £800 million. The increase in import prices, due not to the depreciation of the pound but to world prices, is £700 million. That is the point I was making.

Mr. Shore: rose

Mr. Barber: Now, much more recently, has come the large increase in the price of oil. This is a development which affects every industrialised country throughout the world, some much more seriously than the United Kingdom—Japan, for example.
Increases in the price of oil on the scale which has now taken place are also a factor which could not have been foreseen. I should say in passing that, as my right hon. Friend the Member for Stafford and Stone (Mr. Hugh Fraser) said, energy is at the heart of our problem. Of course it is true that, as the right hon. Member for Leeds, East said in our last debate, the increases should produce an inflow on capital account as well as benefiting our exports. But it must be said that, whatever differing views there may be about the most appropriate way of dealing with the situation, the increases in world prices are bound to affect living standards in this country, as in most other industrialised countries. This simple home truth is one that any British Government would have to face.
My right hon. Friend the Prime Minister and I have many times made it clear that the Government's plans were based on the assumption that there would inevitably be a period of deficit on our trade account. This raises the basic issue on which each hon. Member must take a view: are we, in the light of recent developments, to abandon the strategy of an economy growing broadly in line with the growth of our productive capacity? The Government's answer is "No".
The policy we have been pursuing involves, first, a major stimulus to demand to employ under-used resources and to provide a firm assurance for industrial investment; secondly, a transition to a rate of growth of demand which matches the current growth of productive capacity; and thirdly, as the new industrial investment comes into production, an improvement in the underlying rate of growth of our economic capacity.
To abandon that strategy now would be both wrong and unnecessary. For reasons which I shall give in a moment, I see no reason why we should not achieve the rate of growth next year of 3½ per cent. which was set out in the recent White Paper. To do otherwise would be to repeat the very mistake which was made by the Labour Government in 1966. The National Institute summed up those measures in 1966 with the words:
The simplest way of summing up the effect of the measures is to say that they put the British economy on a 1 per cent.—1½ per cent. growth path.


In the light of the Opposition's record, I am not surprised that the Leader of the Opposition takes the view that growth will inevitably slow down—

Mr. Harold Wilson: It has done.

Mr. Barber: —below the figure which we have set ourselves of 3½ per cent.
The only answer which the right hon. Gentleman"—
the right hon. Member for Leeds, East—
and his colleagues give to the question 'Why should you handle the economy better?' is in essence 'Because we should put into effect the policies of 1966–70.' It is hardly an answer to inspire much confidence.
Those are not my words; they come from this week's New Statesman.
The reality is that, whatever motivated the right hon. Gentleman and his colleagues to put an end to economic expansion in 1966, with all the consequences which followed, in the present situation such a policy would be quite inappropriate.
It is natural that there should be differing views about the management of the home economy. [Laughter.] It is all very well for Labour Members to laugh. The Leader of the Opposition devoted no part of his speech this afternoon to this basic question, which everyone outside the House is talking about. There can be no case for the view that a rate of expansion in line with productive capacity cannot be sustained. United Kingdom exports are now among the most competitive in the world, and there is the added incentive that under the Price Code there is no limitation of any kind on the profits which can be made and retained from export business.
It is therefore not surprising, as my right hon. Friend the Prime Minister said, and it is encouraging to all those who have the interests of our country at heart, that this year, for the first time since the end of the war—the first time for almost 30 years—the volume of United Kingdom exports has risen faster than the volume of world trade. With 30 per cent. of everything that we manufacture being exported, the only rational conclusion is that British industry has very considerable opportunities indeed, and certainly the survey by the Financial Times, which followed last Tuesday's announcement, showed both

that industry approved of the action that we took and that it would not deter investment.
There is at present no general shortage of funds in industry for investment. They are priority borrowers, and we have provided investment incentives more generous than in any other country in Europe and in the United States. Incidentally, lending rates in Britain are now much the same as in Germany. When the right hon. Member for Leeds, East says that the announcements of last Tuesday will deter industrial investment, I can tell him that he is wrong. His view is not the view of industry. It is not the view of the leaders of our major companies. They have said exactly the reverse.

Mr. Healey: We shall see.

Mr. Barber: It is all very well for the right hon. Gentleman to say "We shall see," but ICI has said quite specifically that the announcement will not affect its investment programme, and it is not the only one.

Mr. Healey: Can the right hon. Gentleman tell us of any year since he took over responsibility for the economy in which investment increased in line with the predictions that he made?

Mr. Barber: I am talking about the predictions of the leaders of British industry, and if the right hon. Gentleman studies the surveys he will see that in their view the action that we have taken will make no difference.
On the question of manpower, my reply to my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) and my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) is that I, too, dislike the earnings rule. The only considerations in getting rid of it are public expenditure and priorities.
The purpose of the action taken on Tuesday was twofold—first, to sustain an expanding economy and, secondly, to defend sterling. Since those measures were announced sterling has remained steady, as we intended.
The issues that we have been discussing today are serious, and they deserve serious consideration, and I think, therefore, that most hon. Members deprecate the opening remarks of the Leader of the


Opposition in talking about panic. I wish that the right hon. Gentleman were as responsible as the General Secretary of the TUC, Mr. Murray, who said, either on radio or television, the other day:
I personally, and the TUC, deprecate talk about panic.
It would be a good idea if, from time to time, the right hon. Gentleman were to walk round to Transport House and take a few lessons from the General Secretary.
The reasons why we took action on Tuesday were, first, that the volume of credit was growing too fast—and I think that the right hon. Member for Leeds, East agrees with that. The right hon. Gentleman will recall that during the debate on 5th November I said:
As the economy moves nearer to full employment, it is appropriate that we should tighten the grip on money and credit."—[OFFICIAL REPORT, 5th November 1972; Vol. 863, c. 642.]
It became clear in the latter part of last year that, as industrial investment picked up, bank lending for less essential purposes would have to be moderated if the growing needs of industry were to be met. As the House will recall, in order to keep the banks on a tighter reserve rein, two calls for special deposits were made, the first in the closing weeks of 1972, and a further one in July of this year.
The first reason for last Tuesday's measures was both to slow down the growth of money and credit to rates which were compatible with the sustainable growth in the economy, and to assist sterling. The second reason was the October trade figures. Although, as I mentioned, it is well understood why we face a period of trade deficits, the October figures were bad.
Here I should like to refer to a subject raised by my hon. Friend the Member for Leek (Mr. Knox). It is worth recalling the experience of the United States in this regard. In 1971 pressure on the dollar developed because of weakness in the United States balance of payments. In that year the United States current account deficit swung from virtual balance to a deficit of nearly 3,000 million dollars. Then came the Smithsonian and the first devaluation of the dollar.
But in 1972 the United States current account continued to deteriorate very sharply indeed and the deficit in the year as a whole rose to a massive 8,000 million dollars. Doubts about the dollar persisted and there were some who thought that the measures taken to correct the situation had failed.
Further falls in the value of the dollar followed, and yet slowly the United States current balance was responding to the exchange rate changes and in the first half of this year the deficit fell very sharply; the improvement continued in the third quarter, and the United States current account looks like being in small surplus for the year as a whole.
The third reason for the action that we took on Tuesday—

Mr. J. Enoch Powell: Before he leaves the second reason, will my hon. Friend clear up a point? He said that one of the reasons for the rise in the bank lending rate and the contraction of the credit base was the trade deficit in October. But he has told the House that our mounting trade deficits have been due to world prices. How can those be affected by an increase in the lending rate in this country?

Mr. Barber: For the simple reason that, as was acknowledged by the right hon. Member for Leeds, East and I think generally agreed, clamping down on credit is one way in which to take action to damp down home demand and so help the balance of payments. That is why I said the other day—the right hon. Gentleman quoted me—that this was a tough credit squeeze, which it is.
The third reason why it was necessary to act was industrial unrest, and I shall come back to that. First I want to mention one or two other matters which should be borne in mind in any objective assessment of the situation.
Public expenditure has been mentioned by a number of hon. Members in the course of the debate. It is essential that the trend of public expenditure should be such as to ensure that sufficient resources are available for rising exports and for more industrial investment. The House will recall that in last year's White Paper we therefore set out a pattern for the course of public expenditure which implied a rapid rate of growth while


unemployment was still at a high level, followed by a period of much smaller growth.
As I told the House in the debate the week before last, public expenditure is at present planned to grow in each of the next three years by less than 2 per cent., in other words considerably less than the rate of growth of the economy as a whole. Furthermore, I have made it clear in every Budget speech that, if circumstances should warrant it, I would not hesitate to act further on public expenditure.
Unlike my hon. Friends, who have been consistent throughout on the matter of public expenditure, the Opposition have no proposals at all which are relevant to the immediate situation. Last week the Leader of the Opposition excelled himself by putting forward in one and the same television performance proposals for a vast increase in public expenditure and, within half a minute or so, complaining that the Government were spending too much. He was at it again today, talking of massive subsidies for food, housing and for mortgate interest. We all know that Trans port House has worked out and published that the Opposition's policies would cost an extra £6,000 million.
So the question that the Opposition have to answer is whether they renounce those policies or whether their criticism is just empty bombast. Until they can answer that question, their posturing on public expenditure will remain what it is, a sham.
I said that the third reason for last Tuesday's measures was industrial unrest. Even the right hon. Member for Leeds, East, although he never deigned to mention it in his half-hour speech, will agree that this is a factor which is directly relevant to confidence in sterling. The Leader of the Opposition will certainly agree because it was he who, in 1966, told the House of Commons that sterling had been under pressure as a result of the seamen's strike. So let us have no more of this hollow pretence that the miners' decision has no relevance to overseas confidence particularly when we are faced with the problem of oil supplies.
In the interests of those who do not have the backing of powerful unions it

is essential to maintain the progress we have made in bringing domestic sources of inflation under control. The extent of this progress may be measured by the change in the rate of increase of wage rates. This October the index for basic weekly wage rates was 11·5 per cent. higher than a year earlier. The corresponding figure for last year was 17·8 per cent. This has been achieved because, as one would expect in this country, the trade union movement has abided by the rules which have been laid down by Parliament. The policy for stage 3 holds out a prospect of substantial pay settlements for various groups of workers including miners.
This afternoon my right hon. Friend the Prime Minister set out in some detail what would be available to the miners. In opening the debate the Leader of the Opposition said that the announcement of a state of emergency was a diversion. The only justification for it could have been oil, he said. He must know surely, as everyone else must know, that that was complete and utter nonsense. The right hon. Gentleman apparently says "No". But did he not see that before the overtime ban began Mr. Gormley said absolutely clearly—[Interruption]—I should have thought that the representatives of the mining constituencies would be interested to hear what Mr. Gormley said. He said that within a few days of a complete overtime ban beginning the industry could come to a standstill.
Does the Leader of the Opposition think that is irrelevant to overseas confidence? Does he think it was a statement which the Government could have ignored? I said at the time of the Budget, and I repeat it now, that it is inconceivable that any Government could agree to a dispute being settled by an offer outside the limits approved by this House. That view has also been expressed this afternoon by the Liberal Leader.
Last Saturday the leader column of the Daily Mirror opened with these words:
Labour Leader Harold Wilson last night came out in full support of the miners in their pay battle with the Government.
If that is the view of the Leader of the Opposition all I can say is that the nation will regard it as scandalous. The nation is entitled to know whether the right hon.


Gentleman is prepared to speak out against industrial action in support of a settlement outside the limits laid down by this House—[HON. MEMBERS: "Answer, answer."] That is the question which he has never answered and he has never answered it because the position of the Labour Party is clear. The right hon. Gentleman favours a settlement outside the code and he favours a surrender to the force of industrial action. The purpose of this motion has become all too clear from the speeches which have been made in support of it. It is to seek to gain political advantage from the nation's difficulties.
We even had the spectacle of the right hon. Gentleman the Leader of the Opposition talking not about the real basic economic problems but about the leasing of motor cars. I will give him the answer. Under the Government there has been no change in the taxation treatment of the leasing of a car by a company for the use of its employees. There has been no change in the rules governing the taxation treatment of directors' benefits in kind. The whole argument by the right hon. Gentleman was a diversion. I am surprised that the right hon. Gentleman raised the matter when he must be, I should think, the only man in England who made an instant fortune out of an instant biography about instant government.

Mr. Harold Wilson: The right hon. Gentleman has had his little joke. Will

he now say whether there were capital allowances for cars under a Labour Government and whether there are capital allowances for cars now?

Mr. Barber: I went to the trouble of getting a copy of the brochure which the right hon. Gentleman produced. It is concerned with leasing, which is an entirely different matter.

Mr. Wilson: rose—

Mr. Barber: The public is fully aware of the real problems which the country is facing—namely, the rise in world prices, the oil problem and the serious consequences of industrial unrest. The Leader of the Opposition, the Old Archie Rice of politics, churns out the same old corny entertainment.
The Opposition put forward no constructive proposals. Their policies will stifle growth. The fact is that the Opposition are devoid of principle and credibility. The truth is that whereas our policies are constructive and relevant, the Opposition's approach is negative and irrelevant. That is why the vote tonight will be a vote of censure on them.

Question put,

That this House has no confidence in Her Majesty's Government's management of the economy:—

The House divided: Ayes 286, Noes 304.

Division No. 9.]
AYES
[10.0 p.m.


Abse, Leo
Brown, Ronald (Shoreditch &amp; F'bury)
Davies, Ifor (Gower)


Albu, Austen
Buchan, Norman
Davis, Clinton (Hackney, C.)


Allaun, Frank (Salford, E.)
Buchanan, Richard (G'gow, Sp'burn)
Davis, Terry (Bromsgrove)


Allen, Scholefield
Butler, Mrs. Joyce (Wood Green)
Deakins, Eric


Archer, Peter (Rowley Regis)
Callaghan, Rt. Hn. (James)
de Freitas, Rt. Hn. Sir Geoffrey


Ashley, Jack
Campbell, I. (Dunbartonshire, W.)
Dell, Rt. Hn. Edmund


Ashton, Joe
Cant, R. B.
Dempsey, James


Atkinson, Norman
Carmichael, Neil
Doig, Peter


Austick, David
Carter, Ray (Birmingh'm, Northfield)
Dormand, J. D.


Bagier, Gordon A. T.
Carter-Jones, Lewis (Eccles)
Douglas, Dick (Stirlingshire, E.)


Barnett, Guy (Greenwich)
Castle, Rt. Hn. Barbara
Douglas-Mann, Bruce


Barnett, Joel (Heywood and Royton)
Clark, David (Colne Valley)
Driberg, Tom


Baxter, William
Cocks, Michael (Bristol, S.)
Duffy, A. E. P.


Beaney, Alan
Cohen, Stanley
Dunn, James A.


Beith, Alan
Coleman, Donald
Dunnett, Jack


Benn, Rt. Hn. Anthony Wedgwood
Conlan, Bernard
Eadie, Alex


Bennett, James (Glasgow, Bridgeton)
Corbet, Mrs. Freda
Edelman, Maurice


Bidwell, Sydney
Cox, Thomas (Wandsworth, C.)
Edwards, Robert (Bilston)


Bishop, E. S.
Crawshaw, Richard
Edwards, William (Merioneth)


Blenkinsop, Arthur
Cronin, John
Ellis, Tom


Boardman, H. (Leigh)
Crosland, Rt. Hn. Anthony
English, Michael


Booth, Albert
Crossman, Rt. Hn. Richard
Evans, Fred


Boothrovd, Miss Betty
Cunningham, G. (Islington, S. W.)
Ewing, Harry


Bottomley, Rt. Hn. Arthur
Cunningham, Dr. J. A. (Whitehaven)
Faulds, Andrew


Boyden, James (Bishop Auckland)
Dalyell, Tam
Fernyhough, Rt. Hn. E.


Bradley, Tom
Darling, Rt. Hn. George
Fishre, Mrs. Doris (B'ham, Ladywood)


Broughton, Sir Alfred
Davidson, Arthur
Fitch, Alan (Wigan)


Brown, Robert C. (N'c'tle-u-Tyne, W.)
Davies, Denzil (Llaneily)
Fletcher, Raymond (Ilkeston)


Brown, Hugh D. (G'gow, Provan)
Davies, G. Elfed (Rhondda, E.)
Fletcher, Ted (Darlington)




Foot, Michael
Lewis, Arthur (W. Ham, N.)
Rees, Merlyn (Leeds, S.)


Ford, Ben
Lewis, Ron (Carlisle)
Rhodes, Geoffrey


Forrester, John
Lipton, Marcus
Richard, Ivor


Fraser, John (Norwood)
Lomas, Kenneth
Roberts, Albert (Normanton)


Freeson, Reginald
Loughlin, Charles
Roberts, Rt. Hn. Goronwy (Caernarvon)


Freud, Clement
Lyon, Alexander W. (York)
Robertson, John (Paisley)


Galpern, Sir Myer
Lyons, Edward (Bradford, E.)
Roderick, Caerwyn E. (Brc'n &amp; R'dnor)


Garrett, W. E.
Mabon, Dr. J. Dickson
Rodgers, William (Stockton-on-Tees)


Gilbert, Dr. John
McBride, Neil
Roper, John


Ginsburg, David (Dewsbury)
McCartney, Hugh
Rose, Paul B.


Golding, John
McElhone, Frank
Ross, Rt. Hn. William (Kilmarnock)


Gordon Walker, Rt. Hn. P. C.
McGuire, Michael
Rowlands, Ted


Gourlay, Harry
Machin, George
Sandelson, Neville


Grant, George (Morpeth)
Mackenzie, Gregor
Sheldon, Robert (Ashton-under-Lyne)


Grant, John D. (Islington, E.)
Mackie, John
Shore, Rt. Hn. Peter (Stepney)


Griffiths, Eddie (Brightisde)
Mackintosh, John P.
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Grimond, Rt. Hn. J.
Maclennan, Robert
Short, Mrs. Renée (W'hampton, N. E.)


Hamilton, James (Bothwell)
McMillan, Tom (Glasgow, C.)
Silkin, Rt. Hn. John (Deptford)


Hamilton, William (Fife, W.)
McNamara, J. Kevin
Silkin, Hn. S. C. (Dulwich)


Hamling, William
Mahon, Simon (Bootle)
Sillars, James


Hannan, William (G'gow, Maryhill)
Mallalieu, J. P. W. (Huddersfield, E.)
Silverman, Julius


Hardy, Peter
Marks, Kenneth
Skinner, Dennis


Harrison, Walter (Wakefield)
Marquand, David
Small, William


Hart, Rt. Hn. Judith
Marsden, F.
Smith, John (Lanarkshire, N.)


Hattersley, Roy
Marshall, Dr. Edmund
Spearing, Nigel


Hatton, F.
Mason, Rt. Hn. Roy
Spriggs, Leslie


Healey, Rt. Hn. Denis
Mayhew, Christopher
Stallard, A. W.


Heffer, Eric S.
Meacher, Michael
Stewart, Donald (Western Isles)


Hilton, W. S.
Mellish, Rt. Hn. Robert
Stewart, Rt. Hn. Michael (Fulham)


Hooson, Emlyn
Mendelson, John
Stoddart, David (Swindon)


Horam, John
Mikardo, Ian
Stonehouse, Rt. Hn. John


Houghton, Rt. Hn. Douglas
Millan, Bruce
Stott, Roger


Howell, Denis (Small Heath)
Miller, Dr. M. S.
Strang, Gavin


Huckfield, Leslie
Milne, Edward
Strauss, Rt. Hn. G. R.


Hughes, Rt. Hn. Cledwyn (Anglesey)
Mitchell, R. C. (S'hampton, Itchen)
Summerskill, Hn. Dr. Shirley


Hughes, Mark (Durham)
Molloy, William
Swain, Thomas


Hughes, Robert (Aberdeen, N.)
Morgan, Elystan (Cardiganshire)
Thomas, Rt. Hn. George (Cardiff, W.)


Hunter, Adam
Morris, Alfred (Wythenshawe)
Thomas, Jeffrey (Abertillery)


Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Morris, Charles R. (Openshaw)
Thorpe, Rt. Hn. Jeremy


Janner, Greville
Morris, Rt. Hn. John (Aberavon)
Tinn, James


Jay, Rt. Hn. Douglas
Moyle, Roland
Tomney, Frank


Jeger, Mrs. Lena
Mulley, Rt. Hn. Frederick
Tope, Graham


Jenkins, Hugh (Putney)
Murray, Ronald King
Torney, Tom


Jenkins, Rt. Hn. Roy (Stechford)
Oakes, Gordon
Tuck, Raphael


John, Brynmor
Ogden, Eric
Urwin, T. W.


Johnson, Carol (Lewisham, S.)
O'Halloran, Michael
Varley, Eric G.


Johnson, James (K'ston-on-Hull, W.)
O'Malley, Brian
Wainwright, Edwin


Johnson, Walter (Derby, S.)
Oram, Bert
Walden, Brian (B'm'ham, All Saints)


Johnston, Russell (Inverness)
Orbach, Maurice
Walker, Harold (Doncaster)


Jones, Barry (Flint, E.)
Orme, Stanley
Wallace, George


Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Oswald, Thomas
Watkins, David


Jones, Gwynoro (Carmarthen)
Owen, Dr. David (Plymouth, Sutton)
Weitzman, David


Jones, T. Alec (Rhondda, W.)
Padley, Walter
Wellbeloved, James


Judd, Frank
Paget, R. T.
Wells, John (Maidstone)


Kaufman, Gerald
Palmer, Arthur
Whitehead, Phillip


Kelley, Richard
Pannell, Rt. Hn. Charles
Whitlock, William


Kerr, Russell
Pardoe, John
Willey, Rt. Hn. Frederick


Kinnock, Neil
Parker, John (Dagenham)
Williams, Mrs. Shirley (Hitchin)


Lambie, David
Pavitt, Laurie
Williams, W. T. (Warrington)


Lamborn, Harry
Peart, Rt. Hn. Fred
Wilson, Alexander (Hamilton)


Lamond, James
Pendry, Tom
Wilson, Rt. Hn. Harold (Huyton)


Latham, Arthur
Perry, Ernest G.
Wilson, William (Coventry, S.)


Lawson, George
Prentice, Rt. Hn. Reg.
Woof, Robert


Leadbitter, Ted
Prescott, John



Lee, Rt. Hn. Frederick
Price, William (Rugby)
TELLERS FOR THE AYES:


Leonard, Dick
Probert, Arthur
Mr. Ernest Armstrong and


Lestor, Miss Joan
Radice, Giles
Mr. Joseph Harper.


Lever, Rt. Hn. Harold
Reed, D. (Sedgefield)





NOES


Adley, Robert
Beamish, Col. Sir Tufton
Bowden, Andrew


Alison, Michael (Barkston Ash)
Bell, Ronald
Braine, Sir Bernard


Allason, James (Hemel Hempstead)
Bennett, Sir Frederic (Torquay)
Bray, Ronald


Amery, Rt. Hn. (Julian)
Bennett, Dr. Reginald (Gosport)
Brewis, John


Archer, Jeffrey (Louth)
Benyon, W.
Brinton, Sir Tatton


Astor, John
Berry, Hn. Anthony
Brocklebank-Fowler, Christopher


Atkins, Humphrey
Biffen, John
Brown, Sir Edward (Bath)


Awdry, Daniel
Biggs-Davison, John
Bruce-Gardyne, J.


Baker, Kenneth (St. Marylebone)
Blaker, Peter
Bryan, Sir Paul


Baker, W. H. K. (Banff)
Boardman, Tom (Leicester, S. W.)
Buchanan-Smith, Alick (Angus, N&amp;M)


Balniel, Rt. Hn. Lord
Body, Richard
Buck, Antony


Barber, Rt. Hn. Anthony
Boscawen, Hn. Robert
Bullus, Sir Eric


Batsford, Brian
Bossom, Sir Clive
Burden, F. A.







Butler, Adam (Bosworth)
Heath, Rt. Hn. Edward
Nott, John


Campbell, Rt. Hn. G. (Moray &amp; Nairn)
Heseltine, Michael
Onslow, Cranely


Carlisle, Mark
Hicks, Robert
Oppenhelm, Mrs. Sally


Carr, Rt. Hn. Robert
Higgins, Terence L.
Orr, Capt. L. P. S.


Cary, Sir Robert
Hiley, Joseph
Osborn, John


Channon, Paul
Hill, John E. B. (Norfolk, S.)
Page, Rt. Hn. Graham (Crosby)


Chapman, Sydney
Hill, S. James A. (Southampton, Test)
Page, John (Harrow, W.)


Chataway, Rt. Hn. Christopher
Holland, Philip
Parkinson, Cecil


Chichester-Clark, R.
Holt, Miss Mary
Peel, Sir John


Churchill, W. S.
Hordern, Peter
Percival, Ian


Clark, William (Surray, E.)
Hornby, Richard
Peyton, Rt. Hn. John


Clarke, Kenneth (Rushcliffe)
Hornsby-Smith, Rt. Hn. Dame Patricia
Pike, Miss Mervyn


Cockeram, Eric
Howe, Rt. Hn. Sir Geoffrey (Reigate)
Pink, R. Bonner


Cooke, Robert
Howell, David (Guildford)
Pounder, Rafton


Cooper, A. E.
Howell, Ralph (Norfolk, N.)
Powell, Rt. Hn. J. Enoch


Cordle, John
Hunt, John
Price, David (Eastleigh)


Corfield, Rt. Hn. Sir Frederick
Hutchison, Michael Clark
Prior, Rt. Hn. J. M. L.


Cormack, Patrick
Iremonger, T. L.
Proudfoot, Wilfred


Costain, A. P.
Irvine, Bryant Godman (Rye)
Pym, Rt. Hn. Francis


Critchley, Julian
James, David
Quennell, Miss J. M.


Crowder, F. P.
Jenkin, Rt. Hn. Patrick (Woodford)
Raison, Timothy


Davies, Rt. Hn. John (Knutsford)
Jennings, J. C. (Burton)
Ramsden, Rt. Hn. James


d'Avigdor-Goldsmid, Sir Henry
Jessel, Toby
Rawlinson, Rt. Hn. Sir Peter


d'Avigdor-Goldsmid, Maj-Gen. Jack
Johnson, Smith, G. (E. Grinstead)
Redmond, Robert


Dean, Paul
Jones, Arthur (Northants, S.)
Reed, Laurance (Bolton, E.)


Deedes, Rt. Hn. W. F.
Jopling, Michael
Rees, Peter (Dover)


Digby, Simon Wingfield
Joseph, Rt. Hn. Sir Keith
Rees-Davies, W. R.


Dixon, Plers
Kaberry, Sir Donald
Renton, Rt. Hn. Sir David


Dodds-Parker, Sir Douglas
Kellett-Bowman, Mrs. Elaine
Rhys Williams, Sir Brandon


Drayson, G. B.
Kershaw, Anthony
Ridley, Hn. Nicholas


du Cann, Rt. Hn. Edward
Kimball, Marcus
Ridsdale, Julian


Dykes, Hugh
King, Evelyn (Dorset, S.)
Rippon, Rt. Hn. Geoffrey


Eden, Rt. Hn. Sir John
King, Tom (Bridgwater)
Roberts, Wyn (Conway)


Edwards, Nicholas (Pembroke)
Kinsey, J. R.
Rodgers, Sir John (Sevenoaks)


Elliot, Capt. Walter (Carshalton)
Kirk, Peter
Rossi, Hugh (Hornsey)


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Knight, Mrs. Jill
Rost, Peter


Emery, Peter
Knox, David
Royle, Anthony


Eyre, Reginald
Lamont, Norman
Russell, Sir Ronald


Farr, John
Lane, David
St. John-Stevas, Norman


Fell, Anthony
Langford-Holt, Sir John
Sainsbury, Tim


Fenner, Mrs. Peggy
Le Marchant, Spencer
Sandys, Rt. Hn. D.


Fidler, Michael
Lewis, Kenneth (Rutland)
Scott, Nicholas


Finsberg, Geoffrey (Hampstead)
Lloyd, Rt. Hn. Geoffrey (Sut'n C'field



Fisher, Nigel (Surbiton)
Lloyd, Ian (P'tsm'th, Langstone)
Scott-Hopkins, James


Fletcher, Alex (Edinburgh North)
Longden, Sir Gilbert
Shaw, Michael (Sc'b'gh &amp; Whitby)


Fletcher-Cooke, Charles
Loveridge, John
Shelton, William (Clapham)


Fookes, Miss Janet
Luce, R. N.
Shersby, Michael


Fortescue, Tim
MacAdden, Sir Stephen
Simeons, Charles


Foster, Sir John
MacArthur, Ian
Sinclair, Sir George


Fowler, Norman
McLaren, Martin
Skeet, T. H. H.


Fox, Marcus
Maclean, Sir Fitzroy
Smith, Dudley (W'wick &amp; L'mington)


Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
McMaster, Stanley
Soref, Harold


Fry, Peter
Macmillan, Rt. Hn. Maurice (Farnham)
Speed, Keith


Galbraith, Hn. T. G. D.
McNair-Wilson, Michael
Spence, John


Gardner-Edward
McNair-Wilson, Patrick (New Forest)
Sproat, Iain


Gibson-Watt, David
Madel, David
Stainton, Keith


Gilmour, Ian (Norfolk, C.)
Maginnis, John E.
Stanbrook, Ivor


Gilmour, Sir John (Fife, E.)
Marples, Rt. Hn. Ernest
Stewart-Smith, Geoffrey (Belper)


Gly, Dr. Alan
Marten, Neil
Stodart, Anthony (Edinburg, W.)


Godber, Rt. Hn. J. B.
Mathe, Carol
Stokes, John


Goodhart, Philip
Maude, Angus
Stuttaford, Dr. Tom


Goodhew, Victor
Maudling, Rt. Hn. Reginald
Sutcliffe, John


Gorst, John
Mawby, Ray
Tapsell, Peter


Gower, Raymond
Maxwell-Hyslop, R. J.
Taylor, Sir Carles (Eastbourne)


Grant, Anthony (Harrow, C.)
Meye, Sir Anthony
Taylor, Edward M. (G'gow, Cathcart)


Gray, Hamish
Miss, Peter (Torrington)
Taylor, Frank (Moss Side)


Green, Alan
Miscampbell, Norman
Taylor, Robert (Croydon, N. W.)


Grieve, Percy
Mitchell, Lt.-Col. C. (Aberdeenshire, W)
Tebbit, Norman


Griffiths, Eldon (Bury St. Edmunds)
Mitchell, David (Basingstoke)
Temple, John M.


Gummer, J. Selwyn
Moate, Roger
Thatcher, Rt. Hn. Mrs. Margaret


Gurden, Harold
Molyneaux, James
Thomas, John Stradling (Monmouth)


Hall, Miss Joan (Keigley)
Money, Ernie
Thomas, Rt. Hn. Peter (Hendon, S.)


Hall-Davis, A. G. F.
Monks, Mrs. Connie
Tileny, Sir John


Hamilton, Michael (Salisbury)
Monro, Hector
Trafford, Dr. Anthony


Hannam, John (Exeter)
Montgomery, Fergus
Trew, Peter


Harrison, Brian (Maldon)
More, Jasper
Tugendhat, Christopher


Harrison, Col. Sir Harry (Eye)
Morgan, Geraint (Denbigh)
Turton, Rt. Hn. Sir Robin


Harvie Anderson, Miss
Morgan-Giles, Rear-Adm.
van Straubenzee, W. R.


Haselhurst, Alan
Morrison, Charles
Vaughan, Dr. Gerard


Hastings, Stephen
Mudd, David
Vickers, Dame John


Hevers, Sir Michael
Neave, Airey
Waddington, David


Hawkins, Paul
Nicholls, Sir Harmar
Walder, David (Clitheroe)


Hay, John
Noble, Rt. Hn. Michael
Walker, Rt. Hn. Peter (Worcester)


Hayhoe, Barney
Normanton, Tom
Walker-Smith, Rt. Hn. Sir Derek







Wall, Patrick
Wilkinson, John
Wylie, Rt. Hn. N. R.


Walters, Dennis
Winterton, Nicholas
Younger, Hn. George


Ward, Dame Irene
Wolrige-Gordon, Patrick



Warren, Kenneth
Wood, Rt. Hn. Richard
TELLERS FOR THE NOES:


Wells, John (Maidstone)
Woodhouse, Hn. Christopher
Mr. Walter Clegg and


Wiggin, Jerry
Worsley, Marcus
Mr. Bernard Weatherill.

Question accordingly negatived.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Walder.

LONGSIDE (MEDICAL SERVICES)

10.13 p.m.

Mr. Patrick Wolrige-Gordon: I am grateful to you, Mr. Speaker, for giving me the opportunity to raise on the Floor of the House a matter of the greatest moment to the people of Longside in my constituency.
The people of Longside have enjoyed the facility of a surgery in Longside and regular consultations with their local general practitioners since 1900. Now the oldest Longside doctor has just retired and that surgery will no longer be available. The remaining doctors of the practice have decided to centralise their facilities in Mintlaw, 2½ miles away. They are absolutely convinced that this is the most efficient way of providing the best possible service to their patients. At Mintlaw they will have ancillary staff. They will be able to operate an appointments system, and they are convinced that this is also the most economic way as well as the most efficient way of serving Longside.
Since the economic argument is the one that is of the greatest relevance to my hon. Friend the Under-Secretary of State for Health and Education, I shall deal with that first. We understand that the present position is that if the doctors centralise their practice in Mintlaw, they will receive a grant of 30 per cent. of the cost, which in this case would simply provide space additional to their existing surgery. They also would receive a loan from the General Practice Finance Corporation. If they did not centralise their surgery in Mintlaw but instead built a new surgery in Longside, as the people there wish, they would not receive any grant and they would have the extra cost of providing a new building as opposed to the addition to an existing building in Mintlaw. The point I wish to emphasise to the Government is that the persuasion of the grant seems to be directed only in favour of the centralisers.
Another point which will concern the Minister in his reply relates to the public services available for the people of Long-side if their surgery is closed and if instead they have to go to Mintlaw. There is one bus, for example, which leaves Longside at 12.30 p.m. and a return bus which leaves Mintlaw at 1.50 p.m. There is also a bus which leaves Longside about 5 p.m. and returns from Mintlaw at 6.30 p.m. The doctors say that under an appointments system system it will be possible for their patients to make proper use of the bus services without undue delay. They also point out that there is a bus stop fairly close to the surgery in Mintlaw—although, incidentally, there is no bus shelter, no car park and no public toilet.
In regard to the provision of drugs, the doctors suggest that a collection system would be simple. They already operate this system for the Maud part of their practice, which is another village in the practice. They would simply invite people to telephone the surgery for their renewed prescriptions and arrange to have them delivered at Longside to some central point in an agreed and arranged fashion. That is the doctors' case as fairly and as briefly as I can put it.
The Longside people see the issue very differently. I remind my hon. Friend of a petition signed by 600 people from the community. They regard the removal of a consultation surgery from Longside as a deprivation of their amenities and their convenience and inevitably feel that it will mean a worse service than that which they have enjoyed hitherto. They say that they see no reason for this practice not to provide a surgery in Longside, such as the surgery which the practice is already providing at Stewartfield. They are concerned that the doctors did not consult their interests before making up their minds and going full steam ahead with a decision to centralise.
There is little confidence among them that an appointments system will work efficiently. They do not feel that there has been any record in the area in the past where an appointments system has operated efficiently. They feel that the bus service is wholly unsatisfactory, as well as expensive. It now costs 18p to make the round trip to Mintlaw. They feel that there is a real danger of patients not being able to get the next bus back


from Mintlaw to Longside but possibly having to spend one or two hours—even two and a half hours—in the village where there is no shelter for them and not even a public convenience.
They do not feel that the provision of a purpose-built surgery in Longside should be beyond the resources of a fairly prosperous group practice and they feel that as the population of their village is due to double fairly soon in any event, urgent consideration should be given now to the business of building a new surgery to serve that village, preferably at a site adjacent to the nurse's house, as has been done recently in another village in the vicinity.
My hon. Friend may well say that there is little he can do, since this is obviously in a sense a matter for the doctors and the Health Service Executive Committee which supports the doctors' plan in this area. I believe, however, that my hon. Friend can change his policy on centralisation and that he can exercise direct influence on the doctors through the fact that, as I understand it, the permission of his Department is necessary for the doctors to obtain their improvement grant for providing additional facilities at Mintlaw.
On general policy it would surely be fair to make an improvement grant available for doctors who seek to localise, as well as for doctors who seek to centralise their services. Leaving aside the point whether the Mintlaw-Longside doctors might not be better advised to provide their services either in an urban area where people are well concentrated already, or in a hospital, there is surely much to be said for those doctors who wish to provide as good a service as they can for the convenience of their patients in the country areas by doing so with as wide a spread of surgeries as possible and receiving at least as much help as those doctors who think in the opposite direction.
I know that at this stage in medicine, as indeed in education, unfortunately, it is fashionable to say that the system which makes sense is the one where everybody is brought together in large groups. But there is a lot of reaction against that in the country quite rightly, and it is also very difficult to persuade a layman like myself, who sees a doctor making his

initial consultation in a patient's house with very little ancillary equipment to help him except his black bag, that that doctor cannot operate perfectly efficiently with a spread of consulting rooms readily available and convenient for the general public, and only afterwards if necessary bringing them 18 pennyworth or more of travel to enjoy the facilities of the central surgery if that is what they need. That is very much my own view, and I do not see how it prevents the records being written up centrally.
I hope my hon. Friend will give very careful consideration to the general point which I have made. Could he also direct his best attention to further consultations with the Longside-Mintlaw doctors to see whether there is any further way in which they can move to meet the wishes of the Longside people? Progress always means different things to different people, but technical efficiency is never so heartwarming as that desire to serve others, which over-rides personal convenience. The Mintlaw-Longside doctors have to demonstrate that the new arrangements which they make will truly be in the best interests of their patients and of their community. I wish them luck. But they should be under no illusions, and nor should my hon. Friend, that, in the words of the Longside Committee,
the arrangements so far suggested for the Longside people mean not inconvenience but hardship.
I hope that we can reconsider that tonight.

10.25 p.m.

The Under-Secretary of State for Health and Education, Scottish Office (Mr. Hector Monro): I am glad that my hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon) has raised tonight the provision of surgery facilities for persons resident in the Longside area. He has been in correspondence with and has spoken to me on this matter and has shown a very keen interest in the welfare of his constituents. He has also written to the Executive Council and seen the doctors. However, I am bound to say at the outset that the question is essentially one for them to consider and that the authority of my right hon. Friend the Secretary of State to intervene is strictly limited.
General medical practitioners are independent contractors who undertake to provide general medical services in an


area and are responsible for the provision of their own consulting premises, which have to be approved as adequate by the Executive Council. If doctors wish to change the places or the times during which they are available for consultation they must obtain the consent of the Executive Council, which has an obligation to consult the local medical committee, which is the representative body of doctors in the area. There is no obligation to consult any other body. The Secretary of State is involved in this statutory process only if the Executive Council refuses consent and the doctor appeals to my right hon. Friend against the refusal.
The reason for a change being proposed in the consultation arrangements at Long-side now is that one of the three doctors in partnership in that area, Dr. Burgess, retired on 31st October and was succeeded in the partnership by Dr. Clubb who is currently residing at Old Deer. Dr. Burgess lives at Longside, where the consulting accommodation forms part of his residence. Since Dr. Burgess intends to continue to reside there, it will not be available for use by the new partnership after the spring of next year. This has been agreed to by Dr. Burgess to facilitate the carrying out of alterations at the surgery at Mintlaw some two and a half miles away.
As I indicated, the Executive Council has no obligation to consult any particular local body of opinion. However, the constitution of the Executive Council, which contains members appointed by the Secretary of State, by the local authorities in the area and by the local professions, is such that it should be able to reflect informed local opinion.
Moreover, when the Executive Council considered the proposal that consultations at Longside should cease, it had before it a petition from the residents in the Longside area and a letter from my hon. Friend expressing concern on behalf of his constituents, so that the decision that it reached was taken in full knowledge of the views of local residents.

Mr. Wolrige-Gordon: Is it not a fact that that decision was taken by a majority of five, eight against and three in favour—a total number of 11 out of 25 members of that committee? Does that represent a quorum qualified to take a decision of that kind?

Mr. Monro: Speaking without absolute certainty, I feel sure that it represents a quorum. It may be that a disappointingly low number of the Executive Council was present, but this certainly was a democratic decision taken in the light of all the information that I have explained to my hon. Friend.
I can fully appreciate the concern of the people in the Longside area, so eloquently expressed by my hon. Friend, at the prospect of losing the consultation facilities at Longside; but, while it may be cold comfort, a considerable number of villages in this and adjoining practices do not have their own consulting facilities, and a great many patients have to travel considerably more than two and a half miles to their doctor's consulting surgery. Representing a rural constituency, I appreciate this issue.
As my hon. Friend brought out in his speech, I have indeed looked at the bus service between Longside and Mintlaw. I am sure that the doctors will arrange an appointments system to fit in with the timetable, which, to be fair, is not an ungenerous one. I see that there are about six or seven buses a day each way and I am sure that a good appointments system can be fitted in with the timetable. I note, too, what my hon. Friend said about prescription arrangements and the possibility of a collection service between Longside and Mintlaw.
After what might be termed the old partnership was formed in 1963, the partners provided group practice premises at Mintlaw where all three partners consulted and were able to accommodate the practice secretarial and nursing assistance. The extensions of the Mintlaw premises should facilitate the introduction of an appointments system in which due regard can be given to the travelling arrangements of patients.
As regards patients in the Longside area who are physically unable to travel to Mintlaw, the position is that a doctor is required to visit and treat a patient whose condition so requires. The fact that the consultation facilities will cease to be provided at Longside means that the partnership may have to undertake an increased number of home visits in the area. In a long-established practice such as we are talking about, I am sure that the doctors concerned have a great knowledge of the elderly folk in the area and that


they will look after them very carefully indeed bearing in mind the difficulties of travel.
As I have stated, the decision where to provide surgery premises is primarily one for the doctors concerned, subject to the approval of the Executive Council. It is clear that the existing surgery accommodation at Longside could not continue to be used, and the choice facing the doctors was where to provide alternative accommodation. I understand that the present population of Mintlaw is 850 and that of Longside about 420. My hon. Friend has mentioned that the population of Long-side may double over the next few years, but I understand that the population of Mintlaw may increase more than three fold during the same period.
It is accordingly understandable why the doctors should choose to develop premises at Mintlaw rather than contemplate providing new ones at Longside, although if the development which my hon. Friend mentioned materialises the doctors are quite free to think again. My hon. Friend mentioned that the economic answer was perhaps the most important to him, but I disagree with him here because what I am most impressed with is the best service within the terms of the National Health Service.
My hon. Friend mentioned the possibility of providing a new surgery at Longside. This is essentially a matter for the doctors concerned in the first place. As far as I am aware they have made no such proposal, and it is perhaps unwise to deal with a hypothetical case. If doctors wish to provide new surgery accommodation and they obtain the consent of the Executive Council to its provision, they are normally responsible for financing it themselves, possibly with the aid of a loan from the General Practice Finance Corporation. There are no grants for the provision of new surgery accommodation, although grants may be available for assisting the improvement of existing surgery accommodation, as is the position at Mintlaw.
If there were accommodation presently in Longside and the doctors wished to improve it, of course it would be open to them to apply for the same grant as they would receive for improving the existing accommodation at Mintlaw. There is no special grant for new surgery accommodation. The grants are available for the improvement of existing accommodation. An executive council may, if so authorised by the Secretary of State, consider the provision of surgery accommodation in special circumstances, but these cases are quite exceptional outside the Highlands and Islands.
My hon. Friend has suggested that doctors are subject to pressures to centralise because of existing financial arrangements. I have indicated to him that this is not so and that the same grants are available wherever the doctors may wish to improve their practice facilities. It is true that an allowance is paid to groups of doctors who work in close association from a common main or central surgery, but this allowance is designed to encourage doctors to make joint arrangements to provide services for patients in an area and to use ancillary staff to help in the efficient administration of their practice. The payment of this allowance does not preclude use of branch surgeries. Indeed, the practice in question has these at Stuartfield and Maud, as my hon. Friend knows.
I listened very carefully to what my hon. Friend said, and I appreciate the strong views that he represented on behalf of his constituents. It is clear that neither the doctors nor the Executive Council have acted unreasonably in the matter, though I appreciate my hon. Friend's wish that they had taken another decision in relation to continuing a branch practice at Longside. But I hope most sincerely that my hon. Friend's constituents will not find the arrangements as difficult in practice as they believe they are likely to be.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes to Eleven o'clock.